SEC Halts Geosyn Mining Fraud Case Amid Federal Criminal Charges

TLDR

• SEC pauses fraud lawsuit against Geosyn Mining after executives’ surrender to federal authorities for similar charges of defrauding customers
• CEO Caleb Ward and operations chiefs Jeremy and Jared McNutt accused of misappropriating investor funds for personal expenses instead of crypto mining operations
• Company raised $5.6 million from 64 investors between 2021-2022 through unregistered securities offering
• Executives allegedly made false claims about special electricity deals and failed to purchase mining equipment
• $1.2 million was used for personal expenses and $354,500 was used to buy Bitcoin to make payouts appear legitimate

The Securities and Exchange Commission (SEC) has temporarily halted its civil fraud lawsuit against crypto mining firm Geosyn Mining. The pause comes after the company’s executives surrendered to face federal criminal charges on similar allegations of investor fraud.

On February 14, 2025, the SEC informed a Texas court about the suspension of proceedings against Geosyn Mining. The decision followed the surrender of the company’s CEO, Caleb Ward, and former operations chief, Jeremy McNutt, to federal authorities.

The federal prosecutors have charged Ward, Jeremy George McNutt, and another former executive, Jared McNutt, with defrauding customers. The allegations state that the executives misused investor funds for personal expenses rather than operating their promised crypto mining business.

The executives requested the SEC pause its case in light of the federal charges. They also cited potential changes in crypto regulation under the Trump administration as a factor that might affect the SEC’s authority in the matter.

However, the SEC has maintained its position that the case is unrelated to cryptocurrency regulation. The agency emphasized that their lawsuit does not involve allegations of selling cryptocurrencies, but rather focuses on the sale of unregistered securities and fraud.

The SEC’s original lawsuit, filed in April 2024, detailed how Ward and Jeremy George McNutt conducted an unregistered securities offering that the agency deemed fraudulent. According to court documents, the executives raised $5.6 million from 64 investors over a 13-month period between November 2021 and December 2022.

The funding was raised through the sale of investment contracts, with the executives making several false claims about their mining operation to attract investors. One of the key misrepresentations involved promises of special electricity deals that would make their mining operations profitable.

Inside the $5.6M Scheme

Court documents reveal that the executives failed to disclose crucial information to their investors. Most importantly, they had not purchased or activated the mining machines that were supposed to generate returns for their clients.

The SEC’s investigation uncovered that $1.2 million of investor funds were diverted for personal expenses. Additionally, the executives used $354,500 to purchase Bitcoin, which they then used to make payouts to other investors, creating an appearance of legitimate mining operations.

The case highlights the complex nature of cryptocurrency-related fraud, where traditional financial crimes can be masked using digital assets. The executives allegedly used Bitcoin purchases to create a facade of mining success, while in reality, no mining operations were taking place.

The investment scheme targeted individuals interested in participating in cryptocurrency mining without having to manage the technical aspects themselves. Investors were promised returns based on the mining operation’s supposed success, but these promises were unfounded according to the SEC’s findings.

The criminal charges against the executives parallel the SEC’s civil case, focusing on similar patterns of deceptive practices and misuse of investor funds. The federal prosecution adds another layer of legal scrutiny to the alleged scheme.

The SEC’s decision to pause its civil case is a standard practice when parallel criminal proceedings are ongoing. This allows the criminal case to proceed without potential complications from simultaneous civil litigation.

The executives face serious consequences if found guilty of the federal charges. Criminal fraud charges typically carry heavier penalties than civil cases, including possible prison time and substantial fines.

The timing of the case’s suspension coincides with broader discussions about cryptocurrency regulation in the United States. However, the SEC has clarified that this case centers on traditional securities fraud rather than cryptocurrency-specific issues.

The investigation revealed that between 2021 and 2022, none of the promised mining equipment was purchased or deployed, despite the executives collecting millions in investor funds. This basic fact underlies both the SEC’s civil case and the federal criminal charges.