FinalHash Purchases Betarigs, Will Roll Out New Features In The Near Future FinalHash CTO Marshall Long announced that they had just closed the deal on purchasing Betarigs. Betarigs is a popular service that allows Bitcoin and Cryptocurrency miners to rent hash power and point it at their pools or even lease out their personal miners…
The Securities and Exchange Commission (SEC) has opened an investigation of GAW Miners and its CEO Josh Garza, according to CoinFire, a Bitcoin news site, which on Tuesday cited “1,000 pages of a [leaked] investigation file.”
GAW was first introduced to the Bitcoin public around a year ago, and first came about re-selling Bitcoin mining rigs. Later, the company shifted to cloud-based mining, and more recently, it introduced its own altcoin, dubbed “Paycoin.” GAW also runs its own cloud-based wallet service (Paybase), its own cloud-based mining service (ZenMiner) and its own online discussion board (HashTalk).
For months, there has been active speculation amongst the Bitcoin community that GAW may be a scam, or at least could be engaged in illegal behavior. There have been threads both on BitcoinTalk and reddit with titles like “GAW Miners – Liars, Frauds – A brief recap of what we know.”
CoinFire did not publish the documents but described them to include a “bombshell draft of a potential enforcement litigation action against the company.” It cited SEC draft language accusing GAW of being in violation of Section 17(a) of the Securities Act of 1933, an anti-fraud provision.
Neither Garza, nor Amber Messer, his assistant, nor Joe Mordica, the company’s chief technology officer, immediately responded to Ars’ request for comment.
Judith Burns, a spokeswoman for the SEC, when asked to confirm CoinFire’s reporting, simply e-mailed: “Decline comment.”
Beyond the ongoing Silk Road trial, the Federal Trade Commission has filed a lawsuit against Bitcoin miner maker Butterfly Labs. Another California-based mining firm, HashFast, is winding down its bankruptcy proceedings. A third company, CoinTerra, was sued last year (the case since went to private arbitration) and is involved in a contract dispute with its Utah-based data center.
Bitcoins for bodyguards?
In a phone interview with Ars earlier this month, Garza said that he “started the company because of scammers.” He claimed that he first heard of Bitcoin around a year ago, at which point he tried to buy a hardware mining rig, and “spent $100,000 for a product I never got.” He declined to say which company he purchased from.
“I’d never had any experience with that—realizing a couple weeks later that these guys didn’t care how much money I can afford to lose,” he said. “I got really frustrated and thought we should start a company to try to fix this.”
Garza told Ars that GAW made “over $1 million in sales our first month,” adding that within a few months, “we leveled at $60 million to $80 million per year.”
He claimed the company has 100,000 customers at present, with “10,000 to 15,000 new accounts per day.”
As of this writing, GAW Miners is only selling two hardware miners, and appears to no longer be selling its cloud-based mining product, known as Hashlets, which were available as recently as earlier this month.
Garza did not speak as scheduled at the North American Bitcoin Conference, held in Miami earlier this week, according to Moe Levin, one of the conference’s organizers.
“We publicly stated that we offered Josh Garza an opportunity to speak, and for attendees to have an opportunity to respond,” Levin told Ars, adding that although he didn’t speak, Garza was at the conference.
“He was at a bottle service table at The Clevelander [Hotel] at the kickoff party,” he said. “We talked briefly and I welcomed him to the conference. He was surrounded by bodyguards—two or three large bodyguards that were blocking anyone from coming near him. I approached him to welcome him and his guards stopped me, until Josh said I was ok.”