Crypto Ponzi Scheme

Texas Man Busted For His Involvement In $9 Million Crypto Ponzi Scheme

A Texas resident found involved in a $9 million digital currency Ponzi scheme has been sentenced to 2 years in prison and 3 years of supervised release. The 33-year-old Homero Joshua Garza was reportedly accused of running several fraudulent crypto mining companies. Thus, he will be required to spend the initial 6 months of his supervised released in house arrest. However, he was also ordered to pay the compensation amount of $9,182,000.

Garza was allegedly operating four fraudulent crypto mining companies which are ZenCloud, ZenMiner, GAW Miners and GAW. The four companies sold virtual currency mining equipment, access to mining equipment, a virtual currency called PayCoin and “hashlets,” which case records said “entitled an investor to a share of the profits that GAW Miners or ZenMiner would purportedly earn by mining virtual currencies using the computers that were maintained in their data centres.”

Garza has been underway the proceedings for at least a year before the sentencing took place recently. The Texas man had earned a maligned reputation in the cryptocurrency community long before then.

Things Garza Did To Run His Ponzi Scheme

According to the reports, Garza told lies to his customers just to make his products more attractive. He would then use the collected money to pay out new investors.

Garza told his clients that GAW had bought an $8 million stake in ZenMiner and that ZenMiner had become a part of GAW Miner.

He even sold more “hashlets” than his equipment was supporting. In simple words, the US attorney for the District of Connecticut, John H. Durham said: “Garza’a companies sold the customers the right to more virtual currency than the companies’ computing power could generate.”

He also told his customers that the value of Garza’s self-created cryptocurrency ‘PayCoins’ would never fall below $20 apiece. Sure, no such reserve ever existed that he claimed ‘$100 million reserves’.

For all his Ponzi scheme, Garza has been ordered to report to the prison in early January next year.