GAW / Josh Garza discussion Paycoin XPY xpy.io ION ionomy. ALWAYS MAKE MONEY :)

[favdesu]

http://www.sec.gov/news/pressrelease/2015-271.html

The SEC’s investigation was conducted by Gretchen Lundgren,

good job, I remember her name, some of you helped her!

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[SDRebel]

PDF attachment
http://animoesto.co.uk/gaw1.pdf

Can't find this in PACER Was going to start pulling down the docket with RECAP.


EDIT: tl;dr - Josh is fucked.

"the imposition of civil penalties due to the egregious nature of defendants’ violations."
 
...

27. In May 2014, Garza created a company named ZenMiner, which was formally
incorporated in July 2014. Though he persuaded other individuals to represent to customers and
the public that ZenMiner was an independent company, Garza owned and controlled ZenMiner
at all times. On information and belief, Garza perpetuated this deception because he believed
that GAW Miners could not offer cloud-based hosted mining services without alienating its
original hardware-purchasing customers.

...

34. This charade continued when, on or about August 24, 2014, GAW Miners issued
a press release announcing that its parent company (which was also owned and controlled by
Garza), had purchased a controlling stake in ZenMiner for $8 million, and that ZenMiner had
become a division of GAW Miners. This statement was false; no such transaction occurred
because Garza had always owned and controlled ZenMiner. Garza authorized and approved the
issuance of GAW Miners’ false press release. The purported ZenMiner transaction was
marketed as proof that GAW Miners was a leader in the virtual currency industry by bridging the
gap between hardware sellers and hosted mining services.

...

35. Second, contrary to its stated reason for existence, no mining actually occurred
through ZenMiner’s ZenCloud interface.

...

53. Garza was responsible for GAW Miners’ and ZenMiner’s decision to keep selling
Hashlets despite his knowledge (or reckless or negligent disregard) that the companies lacked the
computing power they purported to be selling to investors.

...

56. For example, on or about September 11, 2014, GAW Miners announced the
creation of the limited edition “Remember” Hashlet with the logo of “9/11” to commemorate
those whose lives were lost in the terrorist attacks of September 11, 2001. Garza announced that
GAW Miners would only sell 500 Remember Hashlets, and would donate all of the proceeds
(approximately $10,000) to “the 9/11 memorial fund.” He specified that “GAW will in no way
be profiting from any sales related to the cause.” After selling approximately 2,290 Remember
Hashlets for a total of approximately $48,000, GAW Miners donated only $10,000 to a 9/11
related charity. Garza knew or should have known that GAW Miners actually profited from the
sale of Remember Hashlets, contrary to his representations.

...

67. In order to conceal from investors that the mining activity associated with
Hashlets did not produce sufficient revenues to fund the payouts that had been promised to
investors, GAW Miners used revenues from ongoing Hashlet sales to fund payouts to investors.
Thus, Hashlets operated as a Ponzi scheme, in which investors’ returns were mostly paid by
using the money invested by others

excellent summary...bravo!

[vancefox]

I was really rooting for Garza too.   

[dave01]

https://www.youtube.com/watch?v=0O1v_7T6p8U

[AnimoEsto]

I hear that Garza has his best lawyer standing by.....

[kken01]

soo.... is Garza the only one getting nailed?  i hope not

all these technical people in the group who thought that the premine etc. were for the betterment of their project, and not a direct money cow?
with all the stats they should have known the ponzi nature of pre-xpy anyway. enablers (with hopes of personal enrichment) or complete retards at best

[LiteCoinGuy]

http://www.coindesk.com/gaw-faces-ponzi-scheme-charges-from-sec/

[owlcatz]

One thing I find interesting is the lack of information or charges relating to paycoin/xpy. It's almost like that part got skipped over, or didn't matter, so I wonder if there will be more PDF's incoming, or... ? 

[suchmoon]

One thing I find interesting is the lack of information or charges relating to paycoin/xpy. It's almost like that part got skipped over, or didn't matter, so I wonder if there will be more PDF's incoming, or... ? 

Perhaps that's still being investigated. It took them ~ a year to bring the hashlet case to court, Paycoin is more recent so it might be coming later.

Don't forget there might be other agencies and other juicy charges involved, e.g. money laundering.

[Pab]

http://www.coindesk.com/gaw-faces-ponzi-scheme-charges-from-sec/

Finally USA scrutinity takes actions,good signe for digital currencys

What about  Craptsy Mintsy it is  same shit  scam

[HashieNewb]

http://www.coindesk.com/gaw-faces-ponzi-scheme-charges-from-sec/

http://www.sec.gov/news/pressrelease/2015-271.html

“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.

[suchmoon]

Some interesting tidbits:

33.... Garza participated in an interview with a reporter for Cryptocoinsnews.com, during which he convinced a family member of a GAW Miners’ investor to pretend that ZenMiner was that person’s company and idea.

Is this about Stu's son?

Edit: yep https://www.cryptocoinsnews.com/groundbreaking-deal-gawminers-zenminer-will-revolutionize-mining/

I spoke on the phone with Thomas Fraser of Zenminer

49. By October 2014, GAW Miners had oversold Hashlets to an even more extreme degree. It had oversold altcoin mining Hashlets by at least about 100 times its computing capacity, and bitcoin mining Hashlets by at least about 5 times its computing capacity.

51. Throughout the time that Hashlets were sold, from mid-August 2014 through December 2014, GAW Miners and ZenMiner sold at least $19 million of Hashlets, to more than 10,000 investors.

68... In September and October 2014 alone, GAW Miners, at Garza’s direction, converted over $1.5 million in cash to bitcoin to make mining payouts and thus perpetuate their fraud.

91. Hashlets constitute investment contracts, and thus “securities” under Section 2(a)(1) [15 U.S.C. §77b(1)] of the Securities Act.

92. No registration statement was filed with respect to the Hashlets sold by defendants, and no exemption from registration was availablefor these securities.

I wish I could remember who was the first person to bring the hashlets == unregistered securities allegation up in this thread. It only took a year but the US Gov finally agrees

[Mr Felt]

One thing I find interesting is the lack of information or charges relating to paycoin/xpy. It's almost like that part got skipped over, or didn't matter, so I wonder if there will be more PDF's incoming, or... ? 

I suspect that the Paycoin angle will be tackled separately and in surprising fashion (and possibly by or with a different agency).  Hashlets were clearly securities (investment contracts, promissory notes, almost anything can be construed as a security) and were therefore easy to go after by the SEC.  Accordingly, the Hashlet action possibly can be used as a proxy to open up the scope of the investigation (via discovery tools available in litigation).  However, perhaps they (the SEC) have all they need and no announcement has been made yet, or maybe there is not enough to go after (which seems hard to believe), or as stated previously - maybe a totally different agency will step in (CFTC, DOJ, IRS, etc.)

TL;DR - Just guessing, but I would not be surprised if the Paycoin stuff is just idling until more evidence is made available in the discovery period of this action. 

PS - Also, JG would be small potatoes compared to SF.  SF & co. could easily be the actual target for a paycoin-based action.  I mean, what if JG was just a pawn-that-didn't-know-it for SF/CF/etc?  Weirder things have happened . . . .

[owlcatz]

I wish I could remember who was the first person to bring the hashlets == unregistered securities allegation up in this thread. It only took a year but the US Gov finally agrees

For some reason, Jimmothy comes to mind, but I can't be certain.

https://bitcointalk.org/index.php?topic=857670.msg9579418#msg9579418 ?

[Mr Felt]

I wish I could remember who was the first person to bring the hashlets == unregistered securities allegation up in this thread. It only took a year but the US Gov finally agrees    

US Gov probably suspected that for at least that time period (cloud mining existed prior to GAW I believe), but I doubt they had enough in they way of verifiable damages to justify the expense of an investigation or action at the time the suspicions started forming (and I don't know that many pro-bitcoiners would want the govt to have that ability or follow through on it, so taking their time is good a thing from big picture perspective (but it certainly doesn't help all the real losses during the interim, sadly)).  

[suchmoon]

I wish I could remember who was the first person to bring the hashlets == unregistered securities allegation up in this thread. It only took a year but the US Gov finally agrees

For some reason, Jimmothy comes to mind, but I can't be certain.

https://bitcointalk.org/index.php?topic=857670.msg9579418#msg9579418 ?

I think it was brought up as early as September 2014... probably in the older thread: https://bitcointalk.org/index.php?topic=720844.0

[wpstudio]

Well Joshiepoo finally got the media coverage he desired.  Seems like every major financial reporting site is picking up his SEC lawsuit story.

[suchmoon]

I guess we know now why Fraser disappeared from Cantor. There is a good chance that a well-connected firm like Cantor Fitzgerald got a sniff of this coming shitstorm before it hit the news and tried to distance themselves. I hope it won't work.

[HardForkComing]

http://www.coindesk.com/gaw-faces-ponzi-scheme-charges-from-sec/

Finally USA scrutinity takes actions,good signe for digital currencys

What about  Craptsy Mintsy it is  same shit  scam

Canada.

[favdesu]

waiting for the official statement of badbitclown denying the charges