SEC Files New Motion As GAW Miners, ZenMiner Fail To Respond To December Complaint

The US Securities and Exchange Commission (SEC) has filed a motion for ‘Entry of Default’ in its ongoing case against the now-defunct two Connecticut-based Bitcoin mining companies – GAW Miners and ZenMiner.

According to the document received by CoinDesk, the SEC filing alleges that neither of the companies filed an answer or otherwise responded to the Complaint within the stipulated time period. A response to the SEC’s complaint by GAW Miners and ZenMiner was due by 28th December. 

However, the filing does not mention CEO Josh Garza, who was charged with the operation of a Ponzi scheme, CoinDesk noted. According to the SEC’s December complaint, Garza perpetrated the fraud through his companies by claiming to offer shares of a digital Bitcoin mining operation. 

The filing further said that next steps may include a request for an entry of default judgment and court time to determine damages against both the companies. It said:

"Accordingly, following entry of default by the Clerk, the Commission will file a Motion for Entry of Default Judgment with supporting memorandum and exhibits, and may also seek a further hearing to determine the amount of damages against both GAW Miners and ZenMiner pursuant to Fed. R. Civ. P. 55(b)(2)."

The SEC, in its investigations, had found that 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, but 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.