Paycoin scam-master Garza gets pinched
Tuesday 08 December 2015
Josh Garza has found out that the long arm of the SEC can reach into cryptoworld and grab him by the scruff of his slimy neck.
Up until now, there’s been a sense that what happens in crypto, stays in crypto. In the thousand and one hacks and scams of the past few years, only a tiny handful have resulted in any kind of real-world repercussions for the perpetrators. In most cases, the victims have just shouldered their losses and been forced to walk away. Occasionally the authorities get involved, and very occasionally something comes of it - MtGox being the obvious example, and that was after hundreds of millions of dollars went missing.
Now, that’s starting to change.
The most recent person to find out that what goes on in crypto has implications for your freedom in the real world is one Homero Joshua Garza. And frankly, it couldn’t have happened to a more deserving person.
Garza will now be using his hands to sew mailbags instead of typing lies about his overhyped alt businesses
Josh Garza was responsible, earlier this year, for a particularly unpleasant scam that went by the name Paycoin. It had precisely zero technological innovation and zero infrastructure - all the things like payment providers, merchant adoption, and so on, that make a coin usable. What it did have was a very active and convincing marketing department.
Now, many who had been around in crypto for more than five minutes could see Paycoin for what it was: like so many other alts, it was a way of enriching the creator, albeit one carried out with more sophistication than usual. But Garza made efforts to target new users, and sucked in vast amounts of money before the inevitable became clear: Paycoin did not have any payment partners, it was not going to be the next bitcoin, and he could not deliver on his promise that it would soon be worth $20 apiece. Paycoin imploded and practically disappeared.
That’s just a taste of what Garza does for a living. The Securities and Exchanges Commission (SEC), America’s watchdog for the securities industry, has taken interest in him for a separate blatant scam.
Starting in August 2014, GAW Miners, headed up by CEO Josh Garza, sold shares in a cloud-mining venture to over 10,000 people. Cloud mining is tricky enough to gain ROI on at the best of times, but Garza made it even harder by selling contracts for non-existent mining units, which he called ‘hashlets’. This, amongst many other lies, netted GAW a cool $19 million.
The SEC rightly describes the outfit as a Ponzi. The hashpower to generate the promised returns simply didn’t exist. Instead, earlier investors were paid with new investors’ money. Most investors never recovered the value of their initial outlay. Paycoin, it seems, was an attempt to generate more funds and prevent GAW from imploding for just a little while longer.
Now, Garza has been charged with securities fraud, and rightly so. There is nothing edifying about any of this business. It was a get-rich-quick scheme based on fantasy promises and non-existent hardware. The good news is that in nailing Garza to the wall, it sends a strong message to other scammers that getting away Scot free is no longer guaranteed. And, just maybe, the publicity will deter a few punters next time, too. Maybe.
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