Josh Garza Sentenced to Prison and Fined $9M over GAW & Paycoin Scam

GAW/Paycoin 2014 Scam: Josh Garza Sentenced to 21mos Prison, $9M Fine


U.S. Attorney’s Office District of Connecticut has introduced Homero Joshua Garza (Josh Garza) has been sentenced to “21 months of imprisonment, followed by three years of supervised release, the first six months of which [Mr. Garza] must spend in home confinement, for his role in his companies’ purported generation and sale of virtual currency.” The so-called stablecoin founder was additionally ordered to pay restitution of greater than $9 million. After sentencing, he was launched on bond, having been additionally ordered to report for incarceration firstly of subsequent 12 months.

Also learn: Mt. Gox Victims Must Take Claims to Tokyo, Not US, Judge Rules

Josh Garza Is Finally Sentenced, 21 Months in Prison, $9 Million Fine

Slightly greater than 4 years in the past, practically a lifetime within the crypto area, Mr. Garza, 33, is alleged, over an eight-month interval, to have “through GAW, GAW Miners, Zen Miner, and Zen Cloud, companies he founded and operated, defrauded victims out of money in connection with the procurement of virtual currency on their behalf,” in accordance with a press launch from the US Attorney from Connecticut.

GAW/Paycoin 2014 Scam: Josh Garza Sentenced to 21mos Prison, $9M FineMr. Garza throughout higher occasions.

Mr. Garza and cohorts had been concerned in promoting miners, entry to them, and another cryptocurrency known as Paycoin, described as one of many first stablecoins, together with what had been generally known as hashlets. According to the complaint, subsequent indictment, and eventual conviction, a hashlet “entitled an investor to a share of the profits that GAW Miners or Zen Miner would purportedly earn by mining virtual currencies using the computers that were maintained in their data centers. In other words, hashlet customers, or investors, were buying the rights to profit from a slice of the computing power owned by GAW Miners and Zen Miner.”

He was additionally alleged to have made false guarantees to potential and actual traders, together with “that GAW Miners’ parent company purchased a controlling stake in Zen Miner for $8 million and that Zen Miner became a division of GAW Miners,” prosecutors keep. He pushed hashlets, a type of early cloud mining, which the federal government claims was fraudulent. His “companies sold more hashlets than was supported by the computing power maintained in their data centers.”

Josh Garza Imprisoned and Fined $9M over GAW Paycoin ScamEven at its peak, Paycoin failed to keep up its promised $20 peg, reaching a peak of $15.92.

An Early Crypto Ponzi

Then there have been the alleged pump and dump schemes. According to authorities, he “also stated that the market value of a single Pay Coin would not fall below $20 per unit because [his businesses] had a reserve of $100 million that the companies would use to purchase Paycoins to drive up its price. In fact, no such reserve existed.”

GAW/Paycoin 2014 Scam: Josh Garza Sentenced to 21mos Prison, $9M FineAll of it turned out to a be a basic Ponzi, whereby Mr. Garza is alleged to have taken cash from one firm to prop up one other, basically borrowing from newer traders whereas making an attempt to maintain older ones from getting too involved. “The payments were money that the companies owed the older investors based on the purported mining GAW Miners and Zen Miner had done on the investors’ behalf. Through this scheme,” the federal government prices, he “defrauded hundreds of individuals around the world of a total of $9,182,000. Judge Chatigny ordered [Mr. Garza] to pay restitution in the equivalent amount.”

Josh Garza Sentenced to Prison and Fined $9M over GAW & Paycoin ScamMainstream media and go-to pundits comparable to Mr. Casey had been usually unwitting cheerleaders of scams (because of Jamie Redman for supply and graphic).

It was one of many very first US crypto crime instances, involving a number of regulation enforcement and regulatory companies from the Federal Bureau of Investigation to the Securities and Exchange Commission (SEC), and the US Department of Justice. Summer of final 12 months, Mr. Garza struck a plea cope with authorities over prison issues. A swimsuit by the SEC stays ongoing, nonetheless, and will very nicely dampen issues for Mr. Garza even additional. 

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