The SEC charged “Bitcoin mining” companies GAW Miners andZenMiner, and their founder, Homero Joshua Garza, with conducting a Ponzi scheme to defraud investors. Bitcoin “mining” means to apply computer power to complex equations that verify a group of transactions in a virtual currency. The first computer to solve an equation is awarded new units of the virtual currency. The SEC’s complaint alleges that Garza, through GAW Miners and Zen Miners, purported to offer shares of a digital Bitcoin mining operation. In reality, the companies did not own enough computer power for the mining it promised to conduct. Therefore, most investors paid for a share of computing power that never existed. Returns paid to some investors came from proceeds generated from sales to other investors. SEC
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