The US Securities and Exchange Commission (SEC) has put its fraud lawsuit against Geosyn Mining on hold, citing the ongoing federal criminal case against the company’s executives.
The decision marks a rare instance where the SEC has paused enforcement proceedings at the request of the accused, underscoring how federal prosecutions can overshadow regulatory action in cases of alleged securities fraud.
The lawsuit, initially filed in April 2024, accused Geosyn’s CEO, Caleb Ward, and two former executives, Jeremy McNutt and Jared McNutt, of misleading investors about the company’s crypto mining operations.
Federal prosecutors have now charged the trio with defrauding customers of millions of dollars, allegedly using investor funds for personal expenses instead of developing the promised mining infrastructure.
The SEC’s decision to pause its case highlights the intersection of regulatory enforcement and criminal prosecution, particularly as the US government tightens its grip on crypto-related fraud.
SEC steps back as criminal case proceeds
On 14 February 2025, the SEC informed a Texas court that it would suspend its civil case against Geosyn Mining.
This followed the surrender of Ward and McNutt to federal authorities, reinforcing the severity of the criminal allegations.
Prosecutors claim that between November 2021 and December 2022, the executives raised $5.6 million from 64 investors through unregistered securities offerings.
The case centers on allegations that Geosyn Mining promised investors discounted electricity rates that would make crypto mining highly profitable.
The company allegedly failed to activate mining machines for its investors, instead misusing $1.2 million for personal expenses and channeling $354,500 into Bitcoin payouts to conceal the lack of mining operations.
These accusations place the executives at risk of significant criminal penalties, prompting the SEC to step back while federal authorities pursue their case.
Crypto fraud crackdown escalates
The SEC’s decision to halt its case comes amid growing scrutiny over how regulators handle crypto-related fraud.
The agency has been actively pursuing cases against firms accused of misleading investors, but its latest move suggests a willingness to defer to federal prosecutions when criminal charges take precedence.
Notably, Geosyn’s executives had argued that the SEC should reconsider its case in light of the changing regulatory landscape, particularly as the US government explores new crypto oversight policies.
Despite this, the SEC maintains that its lawsuit was not related to the broader debate on digital asset regulation but was instead focused on fraudulent misrepresentations and the illegal sale of unregistered securities.
What’s next for Geosyn Mining’s executives?
With the SEC case now on hold, the focus shifts entirely to the federal criminal proceedings.
If convicted, Ward and McNutt could face severe penalties, including prison time and financial restitution orders.
Legal experts suggest that the SEC’s case could be revived depending on the outcome of the criminal trial, particularly if civil penalties are deemed necessary to compensate defrauded investors.
The situation underscores the increasing legal risks facing crypto firms that operate in regulatory grey areas.
As the US government intensifies its crackdown on crypto fraud, companies promising high returns in the digital asset space may face heightened scrutiny, making regulatory compliance more critical than ever.
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