The US Securities and Exchange Commission (SEC) has sued Carlos Garza, a former employee of defunct GAW Miners and brother of former CEO Josh Garza.
The suit confirms months-long rumors about SEC action on the matter. The regulator likely subpoenaed Carlos Garza because the whereabouts of his brother, Josh, are unknown. The SEC said that it is questioning Carlos due to his apparent knowledge of the inner workings at GAW.
The SEC is investigating whether GAW violated securities laws through the sale of its Hashlet miners and its cryptocurrency, Paycoin. It is also looking into whether GAW operated as a Ponzi scheme by selling more hashing power than it was capable of producing.
Carlos Garza has thus far refused to cooperate with the investigation. “Garza appeared for testimony but refused to answer any questions. Garza also failed to produce any documents requested in the subpoena, including a document he had earlier represented that he would produce.,” charges the SEC.
Garza claimed he did not understand securities law and was uneasy answering questions without a lawyer present.
The United States District Court for Massachusetts has granted an SEC request requiring Garza to either comply with the subpoena or supply proof demonstrating why he cannot appear by September 4.
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A Brazen Operation
As one of the most brazen scams in cryptocurrency to date, GAW burst onto the crypto scene last summer with a series of major announcements, including very cheap miners (Hashlets) and multimillion dollar acquisitions (BTC.com) and mergers (ZenMiner).
It suddenly transitioned away from its Hashlet business last fall into the world of payments. It was promised that ‘PayBase’ had forged strategic partnerships with retailers like Walmart and Amazon. ‘Paycoin’, “the people’s money”, would be accepted by these retailers, and was guaranteed a price floor of $20 (it currently trades at $0.024).
The company frequently failed to deliver on its promises, and repeatedly denied making them in various contradictory statements. Negative commentary about the company on its discussion forum, Hashtalk, was suppressed and removed.
Josh Garza has been a no-show in lawsuits by former customers and the Mississippi Power Company (MPC), and there are reports that he sold his home in Massachusetts and fled the US.
The company collapsed in April. As recently as January, it was generally considered “controversial” in the media, and even received warm attention in mainstream media last November.