Former GAW Miners creator Josh Garza faces a $12 mln fine for running what lawmakers have certified was a “Ponzi scheme.”
Garza, who was charged with securities fraud in 2015 and is also facing separate criminal proceedings for running the fraudulent mining operation, received a final judgment from the US Securities and Exchange Commission (SEC) on June 2.
“According to the SEC's complaint, GAW Miners and ZenMiner did not own enough computing power for the mining they promised to conduct, so most investors paid for a share of computing power that never existed,” the official filing reads.
“Returns allegedly paid to some investors came from proceeds generated from sales to other investors.”
GAW Miners and sister scheme Paycoin attracted widespread accusations while it was active during 2014, despite Garza’s persistent efforts to denounce what he considered defamatory propaganda on the part of users, commentators and the media.
A ruling is yet to be made on what should happen to the Bitcoin funds collected by Garza and his associates, with the virtual currency’s price having markedly increased in the intervening period.
The penalty specifically takes the form of “$10,384,099 in disgorgement and prejudgment interest. The final judgment also requires each entity to pay a civil penalty of $1,000,000.”