Bogus Bitcoiners battered with US$12 million penalty
SEC pounds Ponzi prospectors ZenMiner and GAW Miners
America's Securities and Exchange Commission has won its case against two bogus – and now shuttered – Bitcoin companies operated by Homero Joshua Garza.
At the end of May, the SEC won its case in a Connecticut federal court, and at that time requested the penalties, which amount to $10 million from the defunct companies in “disgorgement and prejudgement interested” and a million from each outfit in penalties.
The regulator has now announced the court's final judgement granted its demand.
The SEC case launched in December 2015 said the two companies purported to offer shares in cloud-based Bitcoin mining machinery, but nothing was ever built: GAW Miners and ZenMiner simply used incoming funds to pay previous investors.
The companies never owned enough computing power to be serious miners, the SEC claimed – and the court agreed – “so most investors paid for a share of computing power that never existed.
The SEC's case said 10,000 investors were scammed of around $20 million in this way.
There's a separate criminal trial against Garza, and the SEC is in talks with him about how to resolve the claims against him.
Ironically, the Bitcoin price ended 2015 bouncing between US$400 and $450. Had the two companies simply bought Bitcoin with their $20 million, on today's $2,740 price for the crypto-currency there'd be around $140 million in the kitty. ®