A former cryptocurrency entrepreneur will spend time behind the bars of a Federal prison after pleading guilty to defrauding customers of $9.2 million.
According to court documents, Hartford Federal Court sentenced Homera Joshua Garza, 33, the former CEO of a now-defunct GAW Miners mining company, to a statutory minimum of 21 months in a federal corrections facility. Joshua Garza pleaded guilty in April 2017 to one felony count of wire fraud related to the sale of a cryptocurrency called PayCoin.
The court initially set a maximum prison sentence cap of 20 years for Garza in July last year – but Judge Robert Chatigny reduced it on account of the convict’s agreement – and a subsequent procession – of repaying customers $9.2 million in recovery. After Garza comes out of prison in 2021, he will further face six-month home confinement and three years of supervised release.
The hearing saw attendance from several GAW Miners victimized customers who stood witness against Garza’s malicious schemes under oath. Mousetrapped, Garza expressed remorse for his actions and gave himself to the mercy of the law – after denying the charges for more than three years.
The outcome of the GAW Miners case comes after a long legal battle that began in 2014 after the company started selling more mining power than it formerly possessed. By then, Garza’s schemey brainchild was already raking in hundreds of thousands of dollars for the promise of adding more mining power to its crypto-mining facility, eventually earning itself a “Ponzi Scheme” status inside the crypto-community.
Amidst the ongoing backlash, Garza also launched PayCoin, a payment cryptocurrency whose value would not go below $20. Investors would flock in promise for a stable coin when, in reality, nothing of value would back the asset. At one time, PayCoin was among the top 10 cryptocurrencies by market cap. At a later time, its value got dropped below $2.
The US Justice Department had featured PayCoin in its lawsuit against Garza and his associated companies which included GAW, GAW Miners, ZenMiner, and ZenCloud.
“The companies sold miners, access to miners, and the right to purchase a virtual currency called “Paycoin,” as well as “hash lets,” the department had found.
GAW Miners and Zenminers sold hash lets as tokens that would offer its holders a slice from the revenue made through the companies’ mining operations. The US Securities and Exchange Commission took notice of a manifest regulatory disregard and filed a $12 million lawsuit against GAW Miners and Zen Miners for selling unregulated “securities.”
Garza will begin the prison term on Jan. 4, 2019.
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