The U.S. Securities and Exchange Commission (SEC) has won default judgments against cryptocurrency mining firms GAW Miners and Zen Miner.
The announcement states:
“On June 2, 2017, the U.S. District Court for the District of Connecticut entered a final default judgment against two Connecticut-based companies, GAW Miners, LLC and ZenMiner, LLC, in a case alleging that these companies and their principal conducted a Ponzi scheme that used the lure of quick riches from virtual currency to defraud investors.”
In December 2015, the SEC filed a complaint alleging that GAW Miners and ZenMiner, along with their principal, Homero Joshua Garza, purported to offer shares to investors in their digital bitcoin mining operation. It stated that the firms did not own adequate computing power for the mining they promised to conduct, meaning that most investors paid for a share of computing power that never existed. Returns allegedly paid to some investors came from proceeds generated from sales to other investors.
The recent judgment follows the court’s May order finding that the SEC established liability as to both defendants and adequately supported its requests for injunctive relief, disgorgement, and civil penalties.
“The final judgment against GAW Miners and ZenMiner permanently enjoins each of them from violating Sections 5 and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder; and orders each of them to pay, jointly and severally, $10,384,099 in disgorgement and prejudgment interest. The final judgment also requires each entity to pay a civil penalty of $1,000,000”, the SEC said, adding that its litigation continues against Garza.
