Feds accuse former Fort Worth crypto company of defrauding clients of $5.6 million #CashNews.co

The federal government filed a lawsuit against a former Fort Worth-based cryptocurrency mining company for allegedly defrauding clients of more than $5.6 million.

In April, the U.S. Securities and Exchange Commission filed a lawsuit against Geosyn Mining and its co-founders Caleb Joseph Ward and Jeremy George McNutt. The lawsuit alleges that Ward and McNutt entered into agreements with around 64 investors, promising to purchase, maintain and operate mining machines. Geosyn would then distribute the mining assets back to investors for a fee.

However, the SEC said the defendants made false claims to investors.

“Almost everything that defendants represented about Geosyn’s miner purchases and operations contained some element of falsity,” the lawsuit read.

Claims to investors that are alleged to be partially or completely false include:

• Having favorable contracts with electricity providers that would allow the company to operate the machines at a profit.
• Mining machines that were promised but not purchased. Geosyn failed to purchase around 400 of the 1,400 machines agreed to in the agreements.
• Providing services such as personalized crypto mining strategies and 24/7 monitoring.

Ward and McNutt allegedly misappropriated $1.2 million for personal expenses, including a $20,000 Las Vegas nightclub wedding celebration, a $49,000 trip to Disney World and payments for criminal charges concerning a drunk driving incident connected to McNutt at a crypto asset conference.

An SEC spokesperson said the federal agency does not comment beyond what is stated in public filings.

Dallas-based GreenClark Law Firm represents Ward, with firm co-founder Jeff Daniel Clark named as one of the defendant’s three attorneys.

“Mr. Ward categorically denies engaging in any fraudulent activity,” Clark said in a statement. “We don’t believe the SEC even has standing to bring this lawsuit against him. We will continue to defend it and we look forward to putting the SEC to its burden of proving its allegations against Mr. Ward.”

McNutt currently has no representation, according to docket filings. The Fort Worth Report was not able to reach him before publication.

Ward’s attorneys argue the agreements were not intended to be formal investment contracts and that investors had more decision-making power than the SEC stated, according to filings provided to the Report.

U.S. District Judge Mark T. Pittman of the Northern District of Texas said in court documents he is “not unsympathetic to these arguments,” but that the SEC has met baseline requirements that its arguments be conceivable and plausible.

Geosyn Mining was founded in 2021 and its offices were at 1227 W. Magnolia Ave.

Fort Worth was the first city in the country to mine cryptocurrency in 2022 and has become a destination for businesses in the industry.

Geosyn raised money from investors from November 2021 to December 2022. The company had two mines in North Texas.

Although no federal registry of cryptocurrency mine locations exists, websites have collected information based on news articles and press releases. FracTracker Alliance mine location data compiled in November 2022 showed Geosyn as one of two companies mining in Fort Worth.

Some crypto fraud can be correlated to legitimate enterprises engaging in illegal activity, while others are simply scammers “pretending to offer legitimate crypto investments,” said William Dickens, an economics and public policy professor at Northeastern University.

“These people and firms are not regulated any more than the guy who offers to send you $10 million if you’ll just send your banking information,” Dickens said.

Cryptocurrency fraudsters are so common that searching the phrase leads to warnings about specific cases, Dickens said.

“It isn’t so much that crypto firms engage in fraud as it is that fraudsters like to use crypto,” he said.

The trial phase is set to begin May 19, 2025.

Ismael M. Belkoura is a reporting fellow for the Fort Worth Report. Contact him at [email protected]. At the Fort Worth Report, news decisions are made independently of our board members and financial supporters. Read more about our editorial independence policy here.

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