Bitcoin Mining Maker GAW Miners Reportedly Under SEC Investigation

The Securities and Exchange Commission (SEC) has started an investigation of GAW Miners and its CEO Josh Garza.

According to CoinFire, a Bitcoin news site, and its sources, the Securities and Exchange Commission (SEC) has started an investigation of GAW Miners and its CEO Josh Garza. Coinfire cited “1,000 pages of a [leaked] investigation file” on Tuesday, January, 20.

The company was first introduced to bitcoin enthusiasts around a year ago, and first came about reselling Bitcoin mining rigs. Later, CoinFire switched to cloud-based mining, besides, recently it introduced its own altcoin, christened ‘Paycoin.’ Moreover, the company operates its own cloud-based wallet service Paybase, its own cloud-based mining service ZenMiner and its own online discussion board HashTalk.

There has been an opinion among the representatives of Bitcoin community for months that GAW Miners may be a scam, or at least could be engaged in illegal activities. There have been threads both on BitcoinTalk and Reddit with titles like “GAW Miners – Liars, Frauds – A brief recap of what we know.

CoinFire did not issue the documents but described them to include a “bombshell draft of a potential enforcement litigation action against the company.” It cited SEC draft language accusing GAW of being in violation of Section 17(a) of the Securities Act of 1933, an anti-fraud provision.

Neither Garza, nor Joe Mordica, the company’s chief technology officer, nor Amber Messer, Garza’s assistant, immediately commented.

When Judith Burns, a spokeswoman for the SEC, asked to confirm CoinFire’s reporting, she simply e-mailed: “Decline comment.”

Ars Technica had a phone interview with Garza earlier this month, during which he said that he “started the company because of scammers.” Garza stated that he heard of Bitcoin for the first time around a year ago, at which point he tried to buy a hardware mining rig, and spent $100,000 for a product he never got. He declined to say which company he bought it from.

“I’d never had any experience with that—realizing a couple weeks later that these guys didn’t care how much money I can afford to lose,” he said. “I got really frustrated and thought we should start a company to try to fix this.”

Garza told that GAW Miners made over $1 million in sales our first month and within a few months they leveled at $60 million to $80 million per year. He admitted that the company has 100,000 customers at present, with 10,000 to 15,000 new accounts per day.

According to his words, GAW Miners only trades two hardware miners and no longer sells its cloud-based mining product, known as Hashlets, which started to be available this month.

Looking back, Garza didn’t present at the North American Bitcoin Conference in Miami. He has preliminary canceled his speech and Q&A session without giving a specific reason to the organizers of TNABC.

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