After an initial denial and the collapse of GAW miners. Josh Garza, the CEO, has been sentenced to 21 months in prison after giving a guilty plea (July last year) to charges of wire fraud.
Garza's sentencing, which includes six months of house arrest and three years of supervised release, follows a years-long SEC pursuit of GAW miners after fraud allegations cropped up in 2014, according to Ars Technica .
At the time, GAW miners was accused of running a Ponzi scheme, as it was allegedly selling more crypto mining power than it actually had available, a move that Garza and his supporters initially denied. The company ended up collapsing in 2015 and it was found out money from latter customers was being used to pay out earlier ones.
The subsequent collapse of GAW miners saw its internal emails get leaked, which opened the information floodgates. These internal emails, some from Garza himself, served as proof GAW miners had indeed oversold its crypto mining capacity and shed light on Paycoin – a cryptocurrency the company failed to launch.
Paycoin was part of the Justice Department's arsenal in the lawsuit against Garza, and was initially pitched as a semi-stable coin (to be used as a medium of exchange) with a price “floor" of $20 per coin. This, according to the source, turned out to be a pump and dump scheme attached to a failed buyback attempt, as the coin's price plummeted.
Almost two years have passed since the US Securities and Exchange Commission (SEC) went after Garza and GAW miners with the lawsuit. The wheels of justice turned to the conclusion that Josh Garza is guilty and liable to pay a fine of more than $9 million dollars.
Garza’s scams are just some of many that have been caught in the crypto space. The leader of a $1.8 million cryptocurrency armed robbery and kidnapping has also recently pleaded guilty. As CryptoGlobe covered, Thai authorities expect a growing wave of crypto-related crime .