PayCoin scammer sentenced to 21 months in prison

The former Chief Executive Officer of Gaw Miners, the company behind the PayCoin scam, has been sentenced to 21 months in prison.

Homero Joshua Garza was originally given a 20-year sentence after pleading guilty last July to a wire fraud charge related to the creation and sale of a scam coin called PayCoin. On Thursday, a US judge ruled Garza must report to prison on 4th January 2019 and will be jailed until 2021, with an additional three years of supervised release, including six months in home detention.

He has also been ordered to pay $9.2 million (£7 million) to investors as restitution for the nine-month cryptocurrency scam he ran.

Hashlets

Gaw Miners, and its associated companies ZenMiner and ZenCloud, sold “hashlets” to investors, which were the right to profit from a slice of the companies’ virtual currency mining operation. Prosecutors said they sold more hashlets than they had computing power to cover, according to a report by Hartford Business.

Gaw also lied to investors about the company purchasing an $8 million stake in ZenMiner and guaranteed a $20 floor price for PayCoin on the basis that the companies had a $100 million reserve at their disposal to keep the price afloat, when they in fact did not.

The Bloomfield, New Jersey-based company specialised in manufacturing, supplying and selling hardware for crypto mining. It was shut down in 2015.