SEC Files Charges Against Joshua Garza For Running GAW, ZenMiner Scams

The Securities and Exchange Commission (SEC) on Tuesday charged two Connecticut-based Bitcoin mining companies – GAW Miners and ZenMiner, and their founder Homero Joshua Garza for operating a Ponzi scheme.

The SEC alleges that Garza perpetrated the fraud through his companies by claiming to offer shares of a digital Bitcoin mining operation.  However, the companies did not own enough computing power for the mining it promised to conduct, so most investors paid for a share of computing power that never existed. 

“As alleged in our complaint, Garza and his companies cloaked their scheme in technological sophistication and jargon, but the fraud was simple at its core: they sold what they did not own, misrepresented what they were selling, and robbed one investor to pay another,” said Paul G. Levenson, Director of the SEC’s Boston Regional Office. 

According to the SEC’s complaint, from August 2014 to December 2014, Garza and his companies sold $20 million worth of purported shares in a digital mining contract, dubbed as Hashlet. Over 10,000 investors purchased Hashlets. The investors were misled to believe they would share in returns earned by the Bitcoin mining activities, whereas in reality GAW Miners directed little or no computing power toward any mining activity. Most Hashlet investors never recovered the full amount of their investments, and few made a profit. 

The SEC is seeking a jury trial. Garza's lawyer, New York-based defense attorney Marjorie Peerce, told CoinDesk, "Josh Garza is disappointed that the SEC has filed a lawsuit against him. Any further comments will be through the court process."