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The SEC said the firm made BTC payouts to investors to make them “believe that their mining machines were operational and profitable when they were not” and created “bogus documents” with “fabricated mining production rates and profits.”

It earned $320,000 from mining BTC but gave around $354,500 worth to investors, the SEC alleged. To make up the difference, McNutt purchased Bitcoin and sent it to Ward to pass on to investors, the regulator said.

SEC also claims Ward and McNutt misappropriated around $1.2 million in investor funds for personal use such as meals, nightclubs, vacations, guns, watches and legal fees, including a case where McNutt allegedly used the firm’s credit card on a $20,000 “Las Vegas nightclub wedding celebration” for Ward and a $49,000 family trip to Disney World.

It claimed Ward and McNutt used other $22,000 of investor funds on a breathalyzer device and other expenses relating to McNutt and a Geosyn employee’s alleged separate arrests and convictions for drunk driving during a June 2022 crypto conference.