individuals must ‘mine’ the coins, but it takes a lot of computing power to do so. Instead, cloud mining involves investing in a mining company to do the mining on behalf of the investors.
The problem was that GAW Miners did not have anything at all and was just a Ponzi scheme. Initial investors were paid with the new investors’ money, and the cycle went on until there were
over 10,000 investors. At this point, GAW Miners was running out of funds to pay the investors and they needed a new source of money to keep the scheme going.
The CEO of GAW Miners, Josh Garza, then came up with the idea of Paycoin which was marketed as a revolutionary cryptocurrency. Instead, it was just another generic altcoin like all the
other 1,500 plus in the world, nothing remarkable. Nevertheless, Paycoin was marketed brilliantly and many investors were sucked in, especially those unfamiliar with such altcoin scams.
The hook was that Paycoin would soon reach $20 per, which was higher than the offered price at the time. After investors waited and waited, Paycoin never delivered its promise, and they
quickly gave up. Paycoin simply closed up shop and Garza fled the US.
He was later caught and charged along with GAW Miners with securities fraud by the United States Securities and Exchange Commission (SEC) for offering so-called "Hashlets," or "virtual
miners" which were sold to customers through an internal exchange.
In the SEC's civil case, Garza was held liable for $9,182,000, an amount that the court order said will be "deemed satisfied by the order of restitution. ( October 2017),
The story of victims of these online scams are very painful.
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