SEC Investigation of GAW Miners Underway

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UPDATE 08/18/15

Coin Fire’s initial reporting of the SEC investigation has been publicly confirmed with the SEC issuing a public statement confirming an active investigation is underway.

As part of its investigation, the staff in the SEC’s Boston Regional Office served Garza with a subpoena requiring his testimony in July 2015. After agreeing to several extensions of his testimony date, Garza appeared at the Commission’s offices on August 12, 2015, but refused to provide any substantive testimony. The SEC’s application sought an order from the federal district court compelling Garza to provide testimony in response to the subpoena. The court endorsed an order granting the SEC’s application on August 17, 2015. – SEC Statement

Mr. Garza’s brother Carlos a key member of the company’s “sales team” was subpoenaed by the SEC and was not cooperative with the agency. Full details can be read at CoinDesk or via the SEC.gov website.


 

Coin Fire has been able to exclusively confirm that an “active” investigation of GAW Miners, Josh Garza, Paybase, Paycoin, and several other “operating names” for Mr. Garza is underway by the United States Securities and Exchange Commission.

Coin Fire has obtained over 1,000 pages of an investigation file from a confirmed Commission employee that also has a bombshell draft of a potential enforcement litigation action against the company. The documents given to Coin Fire editors contain several hundred references to deleted forum posts on the company owned-and-operated Hashtalk forums, emails from potential victims of securities fraud, news stories from various websites, numerous social media postings, a sealed subpoena demanding the IPs associated with certain accounts on a well-known site where Garza and potential sock puppets have operated, and several storyboards from videos uploaded by the embattled company that enforcement attorneys are stating contain many confirmations of potential wrongdoing.

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The documents provided to Coin Fire are the raw investigation notes being used to decide whether an enforcement action against the company will take place. Many of the items inside the investigation jacket are outside of the standard scope of an SEC investigation.

The Commission is a bureau of the government dedicated to financial fraud or financial crimes as opposed to consumer fraud. While the documents contain allegations against the company from consumers of misappropriations or other potential fraud, the only sections highlighted or referenced in other locations of the document are sections containing specifics about the offering of illegal securities.

One of the cornerstones for the investigation and draft enforcement action is related to three statements Mr. Garza made online that the Commission feels qualified Mr. Garza’s sales as an illegal securities offering. Enforcement attorneys spent several weeks gathering data that Mr. Garza made several efforts to “scrub” from the Internet.

The first major statement that our editorial team has seen highlighted in these documents is a statement from Mr. Garza in August of 2014. Mr. Garza stated that a percentage of the profits for ZenPool came from “day trading.” The fact that he stated it was from day trading created a situation in which, according to various securities laws, makes it a security. This is the first major cornerstone that the SEC intends on using in a potential enforcement action.

Coin Fire is unable to give the other two statements at this time due to potentially compromising the security of the ongoing investigation; however, both statements made by Mr. Garza are large parts of the investigation.

The commission also detailed in a time-line style accounting the events running up to even more recent events, such as the failed “floor” from statements made by Mr. Garza, but later edited on the Hashtalk site and other cryptocurrency news sites.

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Enforcement attorneys for the Commission also drafted reports for potential future litigation stating,

“[..] it is our belief that Mr. Garza has been systematically with the assistance of his employees and “moderation team” been removing large portions of potential evidence from his websites and employing the services of attorneys used to intimidate other sites to remove potential evidence from the public record.”

The jacket contains more than simply evidence of potential wrongdoing by the company. It also has extensive draft court documents that could later be filed against the company and principles of the company.

One document has information about Cantor Fitzgerald’s Stuart Fraser and his involvement with the ongoing saga. The document confirms that Mr. Fraser is involved as an investor (a statement which Coin Fire and many other sites have been unable to verify until this document) and shows that some unwanted SEC attention could be coming his way as well.

The commission jacket also contains extensive evidence archived by victims on the Internet and has draft documents seeking subpoenas in the future requesting copies of the relevant information provided by consumers and victims to certify them for potential future court use.

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Other sections of the investigation jacket are relevant about more recent events with the launch of trading platforms or the purchase of trading platforms upon which the company allows customers to buy, sell, or trade Paycoin. The commission believes that direct market manipulation has also taken place.

As our editorial team and attorneys have sifted through the pages of the jacket, it has become more clear that Mr. Garza’s moves to both remove information from the Internet and restrict others from sharing information indicates that the agency has become more emboldened to seek further outside information.

Coin Fire is working diligently with our editorial team and legal team to decide which parts of the jacket can be shared without jeopardizing the investigation, our sources within the SEC, or potential third parties from destroying further evidence. We will be sharing these documents and information over the next several months in a series dedicated to this ongoing story as we are able to do so.

While the SEC has yet to file or begin any active enforcement actions against Mr. Garza or the associated companies, they have begun amassing potential evidence for those actions and are seeking further information from those in the public who feel they are a victim of securities fraud.

Our source shared the following information with our team stating,

Those who feel they are potential victim of securities fraud should immediately contact the Securities and Exchange Commission with as much relevant information they have. The proper website for doing so is:

http://www.sec.gov/complaint/tipscomplaint.shtml

While the act of reaching an investigation point can take several months or even potentially years, the more information the agency has of potential wrongdoing, the more resources can be dedicated to the investigation and potential enforcement.

This post and series is the result of the work of Leo, Mike, and Christina from the Coin Fire team.

Image provided by Scott S.

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Coin Fire

Coin Fire is a cryptocurrency news site started on June 6th of 2014. The site focused on hard-hitting investigative stories. Coin Fire was acquired by 99Bitcoins on October 2015.

73 Comments

  1. Epic report. Awesome!

    As a side note about the condition of things in this sector…BEWARE:

    With self absorbed, dubious jerks like Theymos with his obvious conflicts of interests, and his gang of highly questionable associates all now censoring posts and even banning accounts where Theymos is an active moderator (at https://www.reddit.com/r/Bitcoin/), and where he even owns and fully controls https://bitcointalk.org/index.php it’s painfully apparent that the dupes and suckers need some serious help and warnings from the likes of coinfire.cf,and plenty of other honorable media outlets.

    It’s past time to dump some jerks and ditch a couple of sites unless of course there is wholesale house cleaning.

    Thank You coinfire.cf and especially the editor and the rest of the team behind this article. THANK YOU.

  2. Capture bonding much gawtards? The SEC investigation is real and it’s already been proven. It’s funny to see all the xpy bagholders getting pissed because a vast majority of the crypto community knows it’s a scam. Your faithless leader with less than one year of college was a clown at the NAbtc conference who passed on speaking because of the 15 crypto pros in front of him actually build technology instead of just copying code.

  3. Fake. No credible source quoted. No credible document dump posted. This might as well just be fake shit copied to pastebin. Even “Leo the journalist” didn’t put his real name on the article.

  4. Its not credible whatsoever!! The SEC would never leak information to a two bit internet site. They would never divulge information about an ongoing investigation. Leaking information pertaining to an ongoing SEC investigation is against the law. The files they showed were a cut and past job from another complaint not pertaining to GAW. Coinfire is complete filth and purposefully attacked GAW and its investors. If proven that coinfire sold a bunch of coins prior to releasing their article with intent to buy back cheaper could be considered market manipulation. They purposefully hurt GAW and its investors on multiple exchanges. Hopefully coinfire will be investigated by the SEC and prosecuted to the fullest extent of the law.

  5. Take a look at their record

    Coinfire reports BFL gets raided by FTC > Week later confirmed by FTC

    Coinfire reports GAW lying about partnerships. Josh says “just wait a month” > Still no way to shop directly at Amazon/Target/Walmart

    Coinfire reports Amazon TOS violation > no more Amazon search on paybase

    Coinfire reports Stripe TOS violation > no more CC purchases

    Coinfire reports impending SEC investigation > ???

    This probably isn’t fake you gaw followers are just in denial

  6. LOL ITS AMAZING WHAT IMPACT PAYCOIN IS HAVING AROUND THE WORLD. OF COURSE THIS IS FAKE EVRY SENSIBLE PERSON KNOWS ITS A BIG SMEAR CAMPAIGN TO TRY AAND DESTROY IT AS ITS A THREAT TO THE BITCOIN INDUSTRY. IT MAKES ME LAUGH ALL THIS, SO MANY NEW COINS COME AND GO THAT YOU NEVER PROB NEVER HEARD OF BUT PAYCOIN EVERYONE HAS HEARD OF, AND THATS BECAUSE ITS A MASSIVE THREAT TO ALL OTHER DIGITAL CURRENCIES THAT WE KNOW OF NOW.

  7. litigation coming on

    I smell a class action law suit coming from this drivle. There is no way in hell you have obtained such info from a suposed live investigation. Any one holding XPY can potentially sue for damages because of this BS.

  8. Homero's Dog on

    Coinfire was 100% right on with there being no partnerships those who want to doubt this are just in denial

  9. So, an SEC employee risks his career to leak information about an ongoing investigation to a tiny blog? Yeah sure, we believe you.
    (Editors, lol. With the amount of grammatical errors littered all over this site, I would imagine anyone would be too embarrassed to identify themselves editors here.)

    • I’m with Sam on this one. This is a single-source story about something that hasn’t happened yet. Professional journalists usually cite at least three sources in their stories to verify that something is a fact. The story itself states that, “The documents provided to Coin Fire are the raw investigation notes being used to decide whether an enforcement action against the company will take place. Many of the items inside the investigation jacket are outside of the standard scope of an SEC investigation.” It’s an interesting story that stirs up the kind of FUD that is attractive to advertisers. Hello, Page Views! I admit I was slightly breathless at the idea that Josh Garza was going to be forced to face the results of his bloviation. But at the end of the day, this story is water-cooler rumor that could have been put on hold until charges were actually filed. You know you’re publishing on the internet for the Reddit crowd. You should have anticipated that we’d want you to prove your tale is true and prepared the documents for digitization and publication.

      • We are working on preparing the documents. Lots of information to sort through and have to be responsible on how we share them.

        It is coming. We have always come through on these things.

        • a xpy holder on

          i bought into xpy on the statement Garza said he would redeem them at $20 or allow me to buy at major stores at that value.That never happened did it, to be honest the fact he erased these promises makes me think there is something fishy and where is the $100 million cash to back that $20 dollar promise did it ever have it?

          • If they really had $100 million to back that up where in the fucking world did it come from?

            Coinbase just got $75 mm from NYSE et others who actually went public with their names. Oh and Coinbase is quite public and doesn’t make wild claims then try to scrub them from the internet. So they act like a real business.

            Whenever someone makes claims they have $100 mm but the “investors” don’t want to be named you should be very skeptical. There are no investors. The whole point is to use the powerful names investing as a PR move.

  10. Garza and his propaganda army are going down, funny watching them try to defend themselves in these comments…shooting the messenger doesn’t change the message!

  11. Please investigate on

    Can you also investigate BobSurplus and Gekko as well for their involvement in multiple scams in the bitcointalk forum?

    • no one wants another shit coin. especially this one entirely based on a lie. Do you still believe Paybase will come about? because that’s the major reason Garza is in this shit. You can’t promise returns and manipulate your own markets, I just blatantly against the law.

    • I’m pretty much a cautious investor and I don’t lay stock too heavily upon one pillar. Of course I hope it works out. Do I think it will with current state of affiars… not so sure. But this is obviously a bunch of “hey look at me” journalistic tactics and I call bullshit

  12. Stop publishing BS articles like this. All they are doing is causing a negative effect on the market. I guess you could have plans to do just that. By any chance do you currently own any XPY?

  13. Not a single source file published. That’s enough for me. Hey coinfire, you already started buying up the cheap xpy again.

    Will release article ASAP publishing details about how your XPY buys and articles seems to be related…..

  14. This was epic-ly juicy. Good luck Homero, hope your family doesn’t miss you too much when you’re in prison for multiple layers of securities fraud and false advertisement.

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