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SEC Preliminary Investigation Into GAW Miners Confirmed, and Information Leaked

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GAW Miners has had a rough few months.  The release of GAW’s alternative to Bitcoin, known as Paycoin (XPY), did not go as they had anticipated, and even their most loyal followers seem shaken, as the featured image above shows.  The $20 floor, that GAW’s CEO, Josh Garza, envisioned, was breached shortly after the currency began to trade on the open market, and at this time, the exchange rate is 1 XPY to $1.10 USD.  The company announced a plan to buy back a minimum of $100,000 worth of Paycoins per month, paying $20 for each one, yet the promise has had no effect on the Paycoin market.  More disturbingly, a large amount of information has become available about some of the inner workings of the company.

While much of what happens internally at GAW is unknown, I have been provided with documents that spell out the ongoing issues in vivid detail, as well as show past issues that have been forgotten, or largely overlooked, by the community thanks to more recent distractions.  I will not draw any conclusions here, nor will I publish some things that I have been told, as I have yet to received proof that they are accurate.  The only details published in this article are based on information provided to me along with substantial proof.

This will be a living document, to be updated as more information is provided to me, or exposed.  If you have provable information about the status of, or actions taken by / against, GAW Labs, GAW Miners, or one of their related companies, please send it to [email protected].

Here is a table of contents, with dates, to keep this organized, and make updates easy to find:

Leaked Emails Confirm SEC Investigation into GAW 2/3/15
“Legal Issues” Supposedly Tying Up Paycoin Honors Program 2/3/15 – Updated 2/4/15
Resigning GAW Employees 2/4/15
Paycoin’s Development Team 2/5/15
GAW and “Primegate” 2/3/15
Vaultbreaker Vaporware 2/3/15
Paycoin Inflation 2/3/15
Deleted Comments 2/5/15

Disclaimer:  As there seems to be some confusion, we wanted to clarify this.  Any mention of “Investigation” in this article is referring to the general acts of “researching”, “studying”, “inquiring” or the first stages of an SEC investigation: 

All SEC investigations are conducted privately. Facts are developed to the fullest extent possible through informal inquiry, interviewing witnesses, examining brokerage records, reviewing trading data, and other methods.

This is not to be confused with a “formal order of investigation”, which has not been proven to be underway at the moment, and would move allow for more extreme measures:

With a formal order of investigation, the Division’s staff may compel witnesses by subpoena to testify and produce books, records, and other relevant documents.

The SEC Has Launched an Inquiry into GAW and Josh Garza

This is certainly not breaking news. Coinfire made early accusations that GAW was releasing misleading statements about Paycoin/Paybase, and followed that by releasing information about an SEC investigation into GAW. The only reason I mention this again, is that we here at Coin Brief can now verify that GAW is being examined by the SEC.

One of our sources has provided us with documents showing internal discussions in which David McLain, communicating with Josh Garza, states this:

The SEC has recently started an open inquiry of GAW, you, etc.

David McLain seems to be a legal consultant to GAW, as “David H. McLain” of “DHM LEGAL SERVICES, LLC” is listed as a correspondent on trademark filings submitted by Josh Garza for the term “GAW Miners”.

An inquiry by the SEC does not, in any way, prove wrongdoing by GAW Miners, Josh Garza, or anyone else, as that will not be determined until their research is complete.  That said, it does cast doubt on the company, if for no other reason than the fact that they have previously rejected the idea of an SEC investigation.  Of course, it is possible that GAW was unaware that the SEC probe was underway when Coinfire announced it.  However, if that is the case, then I cannot understand why the course of action taken was to denounce Coinfire, and dismiss the idea of any potential investigation, rather than prepare to provide the information required, and hope that the inquiry does not go from a preliminary measure to a full fledged formal investigation.

In all honesty, the attention from the SEC is not surprising, as Hashlets are supposedly “mining derivatives” rather than actual, physical hardware that is owned by a user.  Since the user is buying a representation of hashing power, not actual hashing power, that DOES make it a security (as derivatives fall under the umbrella of “securities”).   In fact, it would be more surprising if they were not investigating this at all, as it is clearly in their jurisdiction.  The moment it was announced that Hashlets didn’t represent physical hardware, and would only “simulate” mining on various pools, the line was crossed.  What must be determined now is whether GAW had the authority to issue these derivatives, either directly or in conjunction with other groups, and if they handled the issuance, exchange, etc. legally…

Legal Red Tape is, Supposedly, Tying Up GAW’s Paycoin Honors Program

In an earlier, separate document, another attorney, Carol Van Cleef of Manatt, Phelps, & Phillips, LLP., made a statement to Mr. McLain that included:

the repurchase language should not appear on this release or it will invite the attention of the SEC more rapidly than we would like.

It seems that Mrs. Van Cleef was relaying this message for other members of the legal team who wanted to have time to review, and reword or reject the repurchase language.

These restrictions seem to be having a frustrating effect on Mr. Garza, as he included in his rebuttal:

I was advised by our legal team to run this program. I have been left out of many other legal meetings, and now being told we may not even do the program.

Mr. Garza went on to claim that he was unhappy with being held back, as this repurchase plan was a promise that he made to his customers, and his reputation would suffer, and customers would lose even more, if it did not move forward.  While I initially found it refreshing to see that Josh seems interested in being open with the community, and attempting to ease the losses that so many have experienced, it has since come to light that these emails were leaked directly to people that were considered somewhat “loyal” to GAW.  That makes the wording of the emails, and their contents, questionable, as they may have been crafted simply to reassure those individuals.

Mr. Garza continued on, stating:

We know we have to do the program, we just need to get the right terms,  I can run with that.

If it’s we are not sure we are even going to honor it, I think I need to step down.  If I can not count on the advice of our legal team to the point of me looking like an idiot and putting stuff out and taking it back, I am the wrong guy for this.

This conversation occurred only a few days ago, but obviously Mr. Garza has not stepped down yet.  However, the SEC investigation, along with the legal advice that it seems is being provided to GAW at the moment, creates more questions than it answers.

Resigning, High-Level GAW Employees

This is a subject that still needs some clarification, as I have reports of various resignations over the past few weeks, but I can only find some evidence for a couple of the employees.  While I would like to dig further into this, I also do not want to take the focus away from the primary point of the discussion, which involves those who have remained.

Eric Capuano Resigned in Early January

Around January 24th, 2015, Eric Capuano, who posted on Hashtalk as zen_Eric, and Bitcointalk as zenMiner_Eric, announced that he had resigned from GAW a few weeks ago.  Eric was the original President of Zenminer, then became the General Manager of GAW’s ZenMiner Division when ZenMiner was acquired by GAW.

Eric Capuano Resignation Announcement

While his reasons for leaving were made immediately clear on Hashtalk, a string of posts on Bitcointalk gave a bit of insight into his reasoning.  After announcing that he would be retiring the username zenMiner_Eric here:

Eric Capuano Retired the zenMiner_Eric Username

On January 29, another user, “WaffleMaster” posted his theory about what was happening behind the scenes at GAW.

Recon_eric, responded to this:

All of that is accurate, except for about 95% of it… Shame though, because you were really onto something.

I will say the following, to address your statement at the end. One thing I am comfortably saying publicly, is that nobody in the company had all the pieces to the puzzle except the one who envisioned it all. It’s as if that was the intention all along, only share the bare minimum with whom and of what was needed to build it. Even those of us in the “upper echelon” were totally in the dark on many of the “finer details”. I am prepared to show any authority who asks, it was immediately upon learning those finer details that moved my hand on resigning. The only regret I carry is how long it took me to see the big picture.

My leaving had nothing to do with rumors of pending investigations as I had already resigned before that was even a topic. I am not a fool, if there is an investigation underway, my leaving doesn’t waive my past involvement. I also know that I can confidently answer to anyone who asks that I always stood by what I felt was right.

Hope you guys are having an awesome week.

While this does not directly point any fingers, it heavily implies that something seriously wrong is happening inside of GAW, and that outside of a single person, no one was privy to the overarching plan.  However, there is no way to know what Eric was referring to exactly, and it is very likely that he cannot go into any greater detail without violating a NDA.

Joe Mordica Seems to Have Vanished From GAW

Joe MordicaJoe Mordica has been absent lately, but there has been little confirmation that he actually resigned from his position at GAW.  While we cannot prove with 100% certainty that Mr. Mordica is no longer associated with GAW Labs/Miners, or any of the related companies, there are a few bits of information that seem to suggest this is the case.

First, people have noticed that his LinkedIn Profile is extremely restricted now, and it does not mention GAW anywhere on the public page.  Of course, that does not prove much, as it seems that many members of GAW’s staff have severely restricted access to their LinkedIn pages, and/or scrubbed all mentions of GAW.

However, the “red flag” for me came when I attempted to contact Joe directly.  I have spoken with Mr. Mordica via email in the past, so I attempted to contact him at both [email protected] and [email protected].

I quickly received a reply, but it was not from Joe:

Joe Mordica Gaw Email


So, it seems that Joe’s email addresses no longer exist.  As I said, that is not conclusive proof that he has gone, but it seems very strange that a high-level employee of any company would have their business email account deleted.

Where is the Development Team Behind Paycoin?

Today, Josh Garza released a statement about the development of a Prime Controller UI.  While this is not surprising on it’s own, the statement was followed by a request for community members that were interested in developing the system:

Josh Garza Needs Community Developers


This seems strange to me, as I spoke with Mr. Garza before Paycoin launched, and I mentioned this,” I think this could work pretty well, as it is well thought out. If the team you have working on this can actually make this work the way it is outlined in the whitepaper, it will do phenomenoly. It is making it all just work actually…”  His response was:

I am glad you see that, because I saw people posting that it was “no big deal” and we shopped many, many different developers, and we had people in the industry with a lot of respect flat out say that it is not even possible to build. Like, it is not even possible…there is no way you could build that. So, I am glad you see that.

What Josh had explained to me, partially in that interview, as well as in other conversations, was that GAW had employed a high-end software development firm to completely build the Paycoin system.  Where is this development team now?  Why are community developers needed to complete features that should have been part of the Paycoin system from the start?


It seems that Coin Fire was also given the emails confirming the SEC investigation, and has published their own analysis.  The coming days should be interesting, to say the least.  

We will continue to add to this article, and build it into a more complete “exposé” on GAW, with as much information as we can find.  Again, if you have any provable information related to GAW Miners, GAW Labs, Bring Back ROI, or any other GAW-related company, please send it to [email protected]

Coin Brief is an open source website for digital news. It provides cryptocurrency tools, mining calculators, tutorials, and more. It was acquired by 99Bitcoins on September 2015.

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4 comments on “SEC Preliminary Investigation Into GAW Miners Confirmed, and Information Leaked”

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  1. The Good : We GAW believers were “told” we would get $20 for next to nothing; And got nada, zilch, etc.
    Fabrications involving unsubstantiatable investors, money in the bank, intentions of pie in the sky.

    The Bad: It was uttered

    The Ugly: This Pump was planned by more than just Josh! (Fall Guy)

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