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Ex Crypto Mining Firm CEO Sentenced To 21 Months In Jail For Wire Fraud

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A Connecticut court sentenced the former chief executive officer of a defunct cryptocurrency mining firm to 21 months in jail after he was found guilty to fraudulent mining and sale of virtual currency.

Josh Garza, the CEO of GAW Miners, was sentenced by U.S. District Judge Robert N. Chatigny in Hartford to 21 months imprisonment, followed by three years of supervised release, including home confinement in the first six months.

In a fraud that began in 2014, GAW Miners launched Paycoin, its failed crptocurrency project that was pitched as having a price value of $20.

The company also sold miners, and the right to purchase Paycoin, as well as 'hashlets.' A hashlet entitled an investor to a share of the profits that GAW Miners or its division ZenMiner would purportedly earn by mining virtual currencies.

To generate business and attract potential investors, Garza made multiple false statements related to the scheme. He told investors that Gaw Miners' parent company purchased a controlling stake in ZenMiner for $8 million and that ZenMiner became a division of GAW Miners. In fact, there was no such transaction.

Garza also claimed that the market value of Paycoin would not fall below $20 per unit because the company had a reserve of $100 million. No such reserve existed, the U.S. Securities and Exchange Commission (SEC) found in an investigation.

During the ponzi scheme, Garza used the money he raised from new hashlet investors to pay older investors. It has been estimated that through this scheme, Garza embezzled $9,182,000 from hundreds of people around the world.

In July last year, Garza pleaded guilty to one count of wire fraud. Judge Chatigny ordered Garza to re-compensate the investors he cheated. He was released on bond, and ordered to report to prison on January 4, 2019.

by Joji XavierRTTNews Staff Writer

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