SEC accuses bitcoin mining companies of Ponzi scheme

The Securities and Exchange Commission has accused bitcoin mining companies GAW Miners and ZenMiner of operating a Ponzi scheme. The companies are accused of selling $20 million worth of mining hardware known as Hashlets, which did not have the proper processing power to reward investors, according to a report by BBC.

GAW Miners and ZenMiner were both owned by Homero Joshua Garza. The SEC has accused him of a Ponzi scheme since his investors were owed more money than their mining machines were actually able to generate.

“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 Levenson, director of the SEC’s Boston regional office.

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