Cryptocurrency Ponzi scheme boss heading to prison

The man behind the Paycoin currency is heading to prison…

The CEO behind a cryptocrurrency mining operation, and a fraudulent cryptocurrency, is heading to prison.

Homero Joshua Garza was sentenced to 21 months in prison in a Hartford court yesterday, having pled guilty to the charges put before him.

He had been accused of defrauding investors by some $9.2m, and has duly been ordered to repay that money as part of his sentence. In all, he could have faced 20 years in prison. His lighter sentence comes with a condition too that when he’s released from prison, he’ll be subjected to three further years of supervised release, and an initial six months of not being able to leave home.

Garza had been CEO of the cryptocurrency mining company Gaw Miners, along with its sister companies, ZenMiner and ZenCloud. The company had sold to investors the rights to profits from its mining work, but oversold what they could cover. Effectively, it ended up running a Ponzi scheme, where new investors were being recruited to cover the shortfalls needed to pay the original funders.

Furthermore, Garza created the PayCoin cryptocurrency, that was apparently going to be huge in the consumer payments sector. Garza had suggested that PayCoin would do a deal with Amazon, and also release its own debit card. He boasted of a floor for the cryptocurrency of $20. This all, as you may have guessed, proved to be false.

The full ruling on Garza’s case has been released by the District of Connecticut’s attorney’s office, and is available to read online here.

Garza will begin his sentence in January of next year.