Pissed-Off Customers Sue GAW Bitcoin Miners in Proposed Class-Action Suit
For about a year, 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.”
According to the suit, which was filed last week, GAW founders Joshua Homero Garza and Stuart Fraser (who at the time was a vice president at the investment firm Cantor Fitzgerald) scammed those that paid money, believing they were getting something for that payment. The four named plaintiffs, who seek unspecified damages, hope to represent the approximately 10,000 customers that they say were taken for a ride by Garza and Fraser.
As the plaintiffs allege:
Defendants’ activities had the hallmarks of a Ponzi scheme. Because defendants sold far more computing power than they owned and dedicated to virtual currency mining (with respect to hosted mining services and Hashlets), they owed investors a return that was larger than any actual return they were making on their limited mining operations. Investors were simply paid back gradually over time, as “returns,” the money that they and others had invested in GAW Miners’ products and paid to GAW Miners for purported “maintenance” fees.