October 28, 2016

Firms charges over US Bitcoin ‘scam’

Two Bitcoin mining firms of US have been charged because of their running a scheme that duped more than 10,000 investors.

GAW Miners and ZenMiner are accused of selling shares worth $20m (£13.3m) in mining hardware called Hashlets.

Bitcoins are “mined” when computers solve equations that verify user transactions made with the currency.

But it is claimed that Hashlets did not have enough processing power to carry out the number of verifications required to properly reward investors.

GAW and ZenMiner were owned by Homero Joshua Garza, who has been charged in a Securities and Exchange Commission (SEC) complaint filed in a federal court in Connecticut.

“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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