GAW Miners Faces New Motion from the SEC after Being Accused of Running a Ponzi Scheme

The US Securities and Exchange Commission (SEC) have finally filed a motion for entry of default against GAW Miners.

Previously the SEC filed a securities fraud case against GAW Miners’ Chief Executive Officer Josh Garza for an alleged Ponzi scheme.

The SEC alleged in the motion that GAW Miners had failed to reply to the official complaint in a timely manner.

Prior to this new motion from the SEC, a court in Mississippi ruled against GAW Miners in favor of the State’s electric utility company, where the court served a $340,000 default judgement against the cryptocurrency startup.

GAW Miners recently went out of business after the SEC started looking into the operation of the company, as public suspicion was growing that they were potentially involved in fraudulent activities.

The SEC previously alleged that GAW Miners sold Hashlets fraudulently because they had insufficient mining power compared to the amount of Hashlets they sold.

The SEC concluded that “Hashlet sales had many of the hallmarks of a Ponzi scheme. “Because defendants sold far more computing power than they owned and dedicated to virtual currency mining, they owed investors a daily return that was larger than any actual return they were making on their limited mining operations,” said SEC in the Ponzi scheme charges.

The SEC’s motion for entry of default mentioned that “following entry of default by the Clerk, the Commission will file a Motion for Entry of Default Judgment with supporting memorandum and exhibits, and may also seek a further hearing to determine the amount of damages against both GAW Miners and ZenMiner pursuant to Fed. R. Civ. P. 55(b)(2).”

Kathleen Shields, an SEC attorney also added to the motion that GAW Miners have failed to file an answer to the SEC and that’s why they are moving ahead with the motion. “Neither GAW Miners nor ZenMiner has filed an answer or otherwise responded to the complaint as of today,” she said accordingly to the official files published by CoinDesk on its Scribd account.