The Securities and Exchange Commission has a filed a motion for a default judgement against GAW Miners and ZenMiner.

“The Commission seeks a default judgement because GAW Miners and ZenMiner failed to answer or otherwise defend the Commission’s Complaint against them”

The mining firms, which were run by Joshua Garza, are accused of swindling investors out of millions of dollars by misrepresenting the amount of real mining equipment the companies had installed in their mining facilities.

“Despite claiming to possess large and sophisticated virtual currency mining operations, defendants lacked the computing power that was supposed to be powering the vast majority of those operations”

The SEC also charges that the GAW Miners and ZenMiner committed fraud by intentionally misrepresenting the amount of profit that investor could expect.

According to the filing:

“In furtherance of its fraud, GAW Miners also made numerous misrepresentations to investors and potential investors about the nature and profitability of the investments it was selling.”

The complaint states that both companies are liable for securities fraud because of the way the Hashlets (mining contracts) were marketed and sold to investors. In the filing, Joshua Garza, is specifically accused of intentionally misleading investors and acting with scienter.

The SEC also found that in excess of 10,000 investors were duped by Garza and his two companies.

The Commission calculated that Garza’s fraud cost investors $10,078,331. An additional $305,768 of prejudgment interest puts the final disgorgement figure that the SEC is seeking with this filing at $10,384,099.

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