Breaking bad in the tech industry
last edited: Fri, 14 Sep 2018 12:05:26 -0600
This article relates a typical-sounding story of how good-sounding business plans can go bad under stress. Fake-cryptocurrency Ponzi scheme lands creator in prison
Josh Garza said his company began with noble intentions, but it "turned into greed."
GAW Miners—which stood for Geniuses at Work—first arrived on the Bitcoin scene in 2014, re-selling mining rigs. While GAW initially began as a legitimate company, it soon shifted to its own cloud-based mining service (ZenMiner). When GAW was unable to fill demand for this service, Garza created something called "hashlets"—a slice of purported mining profits, that would "always make money." As 2014 drew to a close and as the Bitcoin hash rate increased, making it more difficult for miners anywhere to make money, his hardware became obsolete.
As he could no longer pay earlier investors, Garza switched tactics again and introduced GAW's own altcoin, dubbed "PayCoin." He promised a $20 per PayCoin price floor, which he would prop up with a claimed $100 million reserve that did not actually exist. GAW also ran its own cloud-based wallet service (Paybase), cloud-based mining service (ZenMiner), and online discussion board (HashTalk). All were fraudulent, using money that later customers put in to pay out earlier ones.