Josh Garza’s plea deal has been released to the public[1] and it gives us some insight into how his sentencing might go on September 13th.
Josh Garza, whose legal name is Homero Joshua Garza, was the head of GAW Miners, a major player in the industry until its collapse. There were accusations abound about them using hardware before shipping it, delaying shipments to keep the hash power offline and various other things. But things really turned sideways when they started their cloud mining operations called ZenMiner. It used a token that represented hash power.
Each coin was supposed to represent hash power on the bitcoin network and would give holders the corresponding block reward as sort of a dividend. Users could trade hash coins on the open market and they would therefore have their own value.
It was a novel concept but it now seems obvious that at least some of the hash power GAW Miners claimed to have didn’t exist and some of the payments given to users weren’t coming from actual bitcoin mining, but from new GAW customers. That classic Ponzi scheme went on for a while until customers started complaining about late payments. It was at that time GAW Miners and Garza launched the next phase of the scheme: Paycoin.
Paycoin was promised to launch with a $20 floor, and its presale price was significantly below that. So many saw it as a can’t miss investment and even the Wall Street Journal hyped it on the Money Beat Blog. When the coin eventually launched, the supposed $20 floor never materialized and its price quickly tanked. Paycoin promised all sorts of solutions, including a gradual buyback (that would have taken decades at their planned rate). The buyback plan never got going and the
