Geosyn Mining Co-Founder Responds to SEC’s Opposition to Motion to Dismiss

News | June 27, 2024 By:

On Friday, June 14, 2024, Caleb Joseph Ward, co-founder of the crypto asset mining company Geosyn Mining, filed a reply to the Securities and Exchange Commission’s (SEC) response opposing his motion to dismiss.

Ward and his company Geosyn are defending themselves against allegations brought by the SEC that the firm conducted an unregistered securities offering through Client Services Agreements (CSAs) related to the hosting of bitcoin mining computers. Through the agreements, clients could purchase miners that Geosyn would set up and manage to earn bitcoin and other cryptocurrencies on the clients’ behalf.

In his reply filed in the US District Court for the Northern District of Texas, Ward argued that the SEC has not adequately shown the client agreements constituted investment contracts and therefore securities under the Howey test. The landmark 1946 Howey case established parameters for determining when non-tangible interests, such as interests in a common enterprise, meet the definition of an “investment contract” and thus a regulated security.

Ward explained several key distinctions between the Geosyn case and Howey. He noted clients retained real control over their property and could terminate agreements or restrict mining at any time. By contrast, the orange grove investors in Howey had no control and relied entirely on the expertise of the company.

The reply also emphasized that Geosyn clients expected to receive the actual bitcoin mined, unlike the Howey investors who received cash payments based on fruit sales. Ward argued profits for Geosyn clients depended solely on the mining capabilities of their computers, not any unique efforts of the company.

In conclusion, Ward argued fair notice was not given that the client agreements could constitute securities and pursuing the case exceeds the SEC’s authority. He requested the dismissal of the complaint.

Please contact BlockTribune for access to a copy of this filing.