Caleb Joseph Ward and Jeremy George McNutt, the owners of Geosyn Mining, a Texas-registered Bitcoin mining company, are being sued by the U.S. Securities and Exchange Commission (SEC) for allegedly participating in an unregistered and fraudulent securities offering.

The complaint claims that the defendants generated over $5.6 million from around 64 individuals "through the sale of investment contracts" between November 2021 and December 2022.

The SEC further alleges that the defendants concealed important facts from prospective investors, such as the fact that they had never bought or turned on mining equipment for certain earlier investors.

In addition, the financial regulator feels that Geosyn "failed to disclose" that it was not giving the services—like individualized crypto mining techniques or 24-hour machine monitoring—that it claimed to be offering in its selling materials.

The lawsuit also claims that Ward and McNutt paid investors a total of around $354,500, ostensibly as dividends from their mining operation, while misappropriating over $1.2 million for their own use. The SEC further stated that internal communications amongst the defendants allegedly suggest the necessity of "purchasing" Bitcoin in order to completely finance these payouts.

Geosyn and its creators have been charged by the SEC with breaking federal securities laws pertaining to registration and antifraud provisions. In addition to any other equitable remedies the court deems necessary, the regulator is requesting "permanent injunctive relief, disgorgement of ill-gotten gains with prejudgment interest, and civil penalties."