The Paycoin saga is finally coming to a close.
As you can see in this document, sent to victims of the Josh Garza pyramid scheme called GAW Miners, Paycoin, et cetera, Garza is scheduled to plead guilty to one count of wire fraud on June 1st. He was previously facing three charges, but high-powered law firm Ballard Spahr did precisely as predicted in our last article, whittling the charges down to one in exchange for a guilty plea. Garza was initially facing securities fraud charges as well as selling unregistered securities. Each securities fraud charge carried up to 25 years and a million dollar fine, whereas wire fraud carries a maximum of 20 years penalty as well as fines.
It is true that “white collar criminals” don’t often get harsh sentences, but it must be kept in mind that the government views Garza’s actions as especially damaging because he used technology they don’t understand. As such, and given the history of cases involving cryptocurrencies (see Ross Ulbricht and the Coin.mx scandal), Garza may just get the book thrown at him.
The federal prison system also has a less generous “good time” situation than do many state institutions. The most days per year that Garza could have knocked off his sentence is 54, meaning that if he were given the full 20 years, he would, without a doubt, do 17 of those years. That is a long time for anyone, and despite the author’s true detestation of the man, he wouldn’t wish that cage on anyone. Nevertheless, people eventually have to answer for their decisions, and often they get exactly what they deserve. It will have to be left in the hands of the federal judge who accepts the plea. Yet, it is safe to say that most of the victims would be happy just to get their money back. It is unclear, at this point, if any part of the deal will entail restitution.
It should also be noted that no one besides Garza has yet faced criminal charges in the case. Zenminer CEO Eric Capauno would not be inaccurately described as a co-conspirator, acting in full knowledge and collusion with Garza. Only during the downfall of Garza did he bother to inform people of the inaccuracy of claims regarding Zenminer and GAW, in particular the claim that GAW had invested $8 million into his firm. Then there is Paul Vernon, former CEO of Cryptsy, who was so complicit that some believe his exchange actually became insolvent as a result of the Paycoin affair.
A scam of this scale could not have been conducted by one man, not in a space where people are quick to do their research and extremely wary of scams. The venerable army of shills who attacked any unkind journalist, the people who openly lied about their returns on GAW investments so as to get others to sign up under their wing of the pyramid, the exchanges that listed Paycoin (most especially Cryptsy), all these are also, by degrees, culpable for the effectiveness of the GAW scam. There were dozens of people who unwittingly helped Garza, as well, and most of these have come clean in the intervening months and years.
Editor’s note: A previous headline referencing a Paycoin scam is inaccurate and has been amended for clarity.
Featured image from Shutterstock.