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from the paying-a-large-"bill"-for-a-bitcoin-scheme dept.
Arthur T Knackerbracket has found an interesting story: Bogus Bitcoiners battered with US$12 million penalty in The Register.
The US SEC (Security and Exchange Commission) won its case against two Bitcoin companies — GAW Miners and ZenMiner — operated by Homero Joshua Garza that bilked 10,000 investors out of about $20 million in what was essentially a Ponzi scheme. The companies purported to sell shares in cloud-based Bitcoin mining machinery, but "the companies never owned enough computing power to be serious miners." The companies were hit with a $12 million penalty. Garza is not, however, off the hook as he is facing a separate criminal trial and he is in talks with the SEC about how to handle the claims lodged against him.
Here's the literal money quote:
Ironically, the Bitcoin price ended 2015 bouncing between US$400 and $450. Had the two companies simply bought Bitcoin with their $20 million, on today's $2,740 price for the crypto-currency there'd be around $140 million in the kitty.
(Score: 2) by Grishnakh on Friday June 09 2017, @02:30PM (1 child)
So they bilked customers out of $20M, and now they have to pay a $12M fine for their fraud. That leaves them with $8M in profit.
(Score: 2) by nobu_the_bard on Friday June 09 2017, @05:05PM
Originally quote as more like $19M from investors in their first scheme. There was actually more than one scheme involved.
https://www.sec.gov/litigation/complaints/2015/comp23415.pdf [sec.gov]
I'm not clear on exactly how much they got to keep though. A Ponzi scheme implies they were paying out money to earlier investors with the later moneys.