This post was last updated September 13, 2018Let's talk about Geniuses at Work Corporation (GAW) and its subsidiaries such as Business Technology for Cryptocurrency LLC (BTC), GAW Miners LLC, Paybase LLC, GAW High Speed Internet (HSI/GAWSPEED), as well as their products and services - ZenMiner, ZenCloud, Hashlet, Paycoin (XPY), Hashstaker. These businesses and services were owned and promoted by Homero Joshua (Josh) Garza, also known by his online aliases GAWCEO, MrCEO, josg21, minerorigin. Let's also take a look at extensions of Garza's projects and people behind them, such as Carmelo Millian and his BTCLend/LendCoin, or the XPY.io group and their ionomy platform.If you are new to this thread I would like to suggest to read this post first and read the last 10 or so pages to catch up with the current events.
The discussion in this thread often gets heated and even borderline NSFW at times. Learning to use the
"Ignore" list might be advisable.
Known legal actions involving GAW and related persons:
SEC issues a subpoenaMississippi Power Company sues GAW and
wins by defaultTwo former customers sue GAW and PaybaseSEC sues Carlos Garza - brother of GAW CEO Homero Garza - to compel him to testify
SEC files fraud charges against Homero GarzaClass action lawsuit filed against Homero Garza and Stuart FraserHomero Garza pleads guilty in a DOJ wire fraud caseBelow is a brief overview of main events in GAW history in reverse chronological order.
Recent eventsJanuary 4, 2019. Garza begins serving his sentence.
September 13, 2018. Homero Joshua Garza has been
sentenced to 21 months in prison for wire fraud.
January 2018. Garza's sentencing, originally scheduled for January 5, has been postponed.
July 2017. Homero Joshua Garza
pleads guilty to wire fraud charges and awaits sentencing.
June 2016. A
civil lawsuit has been filed against GAW, ZenMiner, Josh Garza, and Stuart Fraser. The plaintiffs are seeking class action certification.
April 2016.
The latest SEC lawsuit update stayed (halted) Garza's case for 6 months.
April 2016.
A new fully pre-mined coin (ION) is replacing XPY. Former XPY supporters are now
admitting failure in their year-long attempts to rescue the coin.
December 2015.
The Securities and Exchange Commission (SEC)
has charged Homero Joshua Garza with three counts of securities fraud, mainly focusing on hashlets having been sold as an unregistered security and structured as a ponzi scheme.
November 2015.
BTCLend appears to be having
financial issues. Its forum
BTCLendTalk.org has been shut down and its owner
Carmelo Milian is not communicating with his customers.
September 2015. A new Bitcoin lending site
BitLend.io has been
announced. It employs former
GAW employees and other related persons and is
headed by the
lead litigant in a
group lawsuit against GAW.
August 2015. BTCLend have
released their own cryptocurrency LendCoin (LNC) intended as a replacement for XPY. Initial source code analysis shows serious
privacy and security issues, such as transferring unencrypted private keys to a central server.
August 2015. Josh Garza's brother Carlos was
sued by the SEC to compel him to respond in the
ongoing GAW investigation. The lawsuit was prompted by Carlos'
refusal to answer even the most basic questions and refusal to invoke the 5th amendment.
August 2015. Mississippi Power Company (MPC)
has won a $346k default judgement in a lawsuit against GAW Miners.
July 2015. GAW Miners
has been sued by two customers for "deceptive business practices and materially false and misleading statements to get Plaintiffs and thousands of others to invest in a non-registered investment scheme or business opportunity by misrepresentations and/or omissions of material facts... " etc.
July 2015. A local newspaper in Brattleboro VT
published an article about problems in GAW High Speed Internet (HSI), a company started by Garza before GAW Miners.
May 2015.
BTCLend, a peer-to-peer lending site and online wallet linked to Mr. Garza has been involved in questionable activity, including
"illegal" XPY staking,
Coinbase API issue resulting in
losses for customers, and
attempts to cover up such incidents.
May 2015.
Bitcoinist launched a news portal on
btc.com, a domain controlled by GAW . It is being claimed that there is a long term lease for the domain between Bitcoinist and GAW Miners LLC, however it has not been clarified if Homero Joshua Garza is personally involved in the new site. Update: Mr. Garza failed to pay for the domain and the site is
no longer functional.
April 2015. Multiple e-mail, document, and chat leaks have occurred. Among the highlights of revealed information:
- Josh Garza has close financial (debt) and personal ties with Stuart Fraser, Vice Chairman of Cantor Fitzgerald.
- Former business efforts of Josh Garza such as GAW HSI (internet provider) and GAW mining hardware sales may have been not as successful as Josh Garza previously claimed.
- Financial problems at GAW Miners have been mentioned as early as May-June 2014.
- Hosted and cloud mining services were misrepresented to customers and were not adequately (if at all) backed by mining hardware.
- Josh Garza appears to have lied even to his closest friends, family, lawyers, customers, business partners.
- Hundreds of thousands of XPY have been sold by GAW and/or Josh Garza.
March 2015. GAW CEO Josh Garza attempted to promote two new projects that he claimed are not related to GAW: CoinStand and Mineral.
- CoinStand is an online store that allows to purchase Amazon products and pay with Paycoin. It is only available to a few invited individuals, some of whom were able to use Paycoin at a $20 exchange rate, i.e. purchase up to $1000 worth of products for 50 XPY (worth less than $10 at the time of this post). Purchases were later revealed to come labeled by Amazon as "A gift from Homero Garza".
- Mineral was claimed to be a "fastest growing" crypto currency exchange and a replacement for Paybase, however it has not shown any significant trading volume.
March 2015. GAW fired most of its staff including all developers.
February 2015. There has been a massive leak of GAW e-mails and documents, including communication with customers, overdue bills, SEC subpoena, etc. The discussion starts around
here and archives are
here and
here.
January 2015. Updated: Paybase blog announced a
buy back plan to honor the $20 Paycoin price guarantee. The plan will require Paycoin holders to put the coins into escrow and GAW is committing to paying out a minimum of 100 thousand USD per month to gradually buy those coins at $20 each. It is not known yet as to who will handle the escrow, how long will it take the buy back to complete, and other important details. Registration for the buyback program did not start as scheduled on February 1st due to waiting for an SEC approval according to Mr.Garza (later edited to a more generic "government" approval). This news led to a 50%+ drop in the XPY/BTC exchange rate, which later recovered to about 25% down.
January 2015. Multiple GAW employees are reported to have left the company.
January 2015. A new feature called
Payflash was released to Paybase. I allowed to buy
Gyft gift cards for major retailers using XPY. Shortly after the release the price of XPY on Paybase
crashed as low as $0.01. This may have been caused by
Payflash selling XPY for BTC pay Gyft, and a combination of other issues. Full official explanation has not been released yet and GAW CEO has
cancelled his appearance in TNABC as a result of the issue.
January 2015. GAW CEO Josh Garza is
backing out of a
debate with Litecoin Association Director Andrew Vegetabile. Mr. Garza initially proposed
an open public debate in person online as a way to address the Association's decision to
pull Litecoin out of
GAW-owned exchange
Coin-swap.net. Now Mr. Garza is suggesting an e-mail correspondence instead.
January 2015.
Paybase used payment processor
Stripe to accept credit cards for XPY sales. It may be violating
Stripe's Terms of Service, which has a list of
prohibited businesses that includes virtual currency sales. Credit card purchasing is disabled at this time.
Information below was "current" as of January 2015. It is being retained as a historic reference but is no longer accurate and most of the websites/services mentioned below are no longer functional. Please see the regularly updated timeline above.PaybaseLaunched in the last days of 2014 Paybase is Paycoin (XPY) online wallet, crypto currency exchange, and payment processing platform. It's name and functionality seems to be modeled after
Coinbase, a major Bitcoin payment platform.
Paybase - current statusCurrently Paybase allows to deposit Paycoin, withdraw Paycoin, exchange Paycoin into BTC and BTC into Paycoin. XPY/BTC exchange rate roughly matches the rate on other exchanges (e.g. Cryptsy). There is a simplified buy/sell option that has a
much larger spread, somewhat obfuscated by displaying USD values even for XPY/BTC conversions, and also a more
conventional bid/ask peer-to-peer market similar to other crypto currency exchanges.
Paybase - promisesFuture features may include a
debit card linked to a Paycoin wallet,
bill payment,
online shopping,
multi-coin exchange,
crypto-fiat exchange. These features are currently not implemented or not fully implemented. The ability to purchase XPY for fiat using a credit card was available briefly, as noted in the "Recent events" section above. Online shopping can be done indirectly by purchasing
gift cards on Paybase.
Some of the earlier promises have been later
amended and postponed due to
AML/KYC requirements.
PaycoinPaycoin (initial code name HashCoin, symbol XPY) is a
crypto currency created by GAW with a goal of bringing wide acceptance, price stability, advanced features, and other benefits. It had a short POW phase using SHA256 (same as Bitcoin) algorithm, and is currently in a POS phase. 12 million coins (more than 97% of total supply) were
premined by GAW.
Paycoin - current statusPaycoin is currently trading on most
major exchanges and can be exchanged to/from BTC on Paybase. It can be used with the HashStaker product to
gain 0.972% daily interest. Options to
spend the coin directly are very limited.
Paycoin - promisesA major selling point for Paycoin since its introduction was a
$20 "floor", i.e. GAW maintaining a USD
reserve fund and using it to
buy XPY at $20 each on Paybase. The "floor" has now been
rescinded and XPY is trading at
market prices.
Removal of the "floor" puts into doubt another widely promoted advantage of Paycoin over other crypto currencies -
price stability. In addition to that it has been revealed that Paycoin source code contains
special exceptions for
certain wallets that can stake - or generate new coins - at rates in excess of
3000% annually, which would create hyperinflation.
Paycoin was also promised to launch
"with more merchant acceptance than any other cryptocurrency in history". There is no widespread acceptance as of yet. One of the options to spend XPY includes
PaySave (formerly known as
ZincSave) - a Chrome browser plugin that would intercept the checkout process at online shopping sites such as Amazon or Walmart and allow the buyer to pay with Paycoin. There may be some issues with this approach as the merchants don't seem to be supporting it and
consumer's rights might be affected. PaySave is not functional yet.
Another spending option is a
debit card linked to a Paycoin wallet. Originally expected to be released in
December 2014 it is not available yet.
Paycoin was promoted as having
technical innovations in its development, such as instant transaction confirmations and blockchain compression. The actual coin seems to be a
clone of Peercoin with few modifications and almost none of the promised features. Some
additional features were implemented a week after the original launch.
HashStakerA big part of Paycoin infrastructure is the online staking wallet -
HashStaker. It is hosted on GAW's ZenMiner Cloud site and pays out
0.00972 XPY daily for 1 XPY deposited into it. A HashStaker wallet expires in 3 or 6 months. The 3-month version
sold for 10-12 USD, the 6-month version sold for 18-20 USD. Paycoin deposited into a HashStaker cannot be withdrawn during the 3 or 6 month period.
It has been implied that there are
2.4 million HashStakers (one HashStaker can hold one XPY).
HashStaker - current statusIt has been
calculated that for HashStakers to be profitable the XPY exchange rate needs to be at least $10-15, depending on the HashStaker purchase price. Currently the XPY rate is very volatile but with the $20 "floor" no longer supported it puts the profitability of retail-purchased HashStakers at risk. It has been announced that 90% of Hashlets have been
converted to Hashstakers. This option might still be profitable, as some Hashlets were cheaper than HashStakers.
If there are 2.4 million HashStakers the daily payouts would be approximately 23 thousand XPY. At $5 to $20 per XPY that is between 115-460 thousand USD daily, but at this time there is no evidence of GAW generating such amounts of revenue to sustain these payouts.
HashStaker - promisesIt has been announced that HashStakers will be available to
trade on the ZenMiner Cloud Market (like Hashlets), however this option is not available yet.
HashBaseHashBase was originally planned as a replacement for ZenMiner Cloud mining portal, with additional features such as coin exchange. Some of these features have been later re-branded as Paybase.
HashBase - current statusHashBase release scheduled for December 2014 has been
delayed by a month. It is likely that this timeline will not be met as it has been indicated that GAW has focused most of their development effort on
Paybase exchange.
HashBase - promisesGAW organized an application process for HashBase beta-testers. It was announced that 12 participants
have been selected, however it is unknown who those testers are or if there was any testing done.
HashletsHashlet is a
"Digital Cloud Miner" introduced in August 2014 and no longer sold by GAW, but still available in ZenMiner Cloud Hash Market. It was sold as an amount of hashrate, available in 1 MH/s (Scrypt) or 10 GH/s (SHA256) slices. It does not have an expiration date. There is a daily maintenance cost of 0.08 USD per 1 MH/s (Scrypt) or 0.02 USD per 10 GH/s (SHA256). Hashlets were sold in several flavors, the most expensive of which was Prime Hashlet. Prime and Zen hashlets have exclusive access to
ZenPool - "The World's Most Profitable Pool".
In October of 2014 hashlet mining profitability decreased significantly in part due to a sharp decline in BTC/USD exchange rate and the USD-based maintenance fees consuming between 40-100% of mining revenue. ZenPool revenue also declined due to what GAW described as
negotiations with private hashrate renters. At that time GAW introduced an option to
mine Hashpoints (HP). 1 MH/s Hashlet could earn 18-20 HP per day and there were no maintenance fees. Hashpoints were converted to Paycoin after it was launched in mid-December at a rate of 400 HP for 1 XPY and Hashpoint mining ended.
Hashpoint mining was initially available for Prime Hashlets, later expanded to Zen Hashlets, and in the last week before Paycoin launch to remaining Solo Hashlets. A Prime or Zen Hashlet could have mined 2-2.5 XPY during the Hashpoint mining period. A solo hashlet could have mined ~0.3 XPY.
Hashlets - current statusGAW provided an option to convert Hashlets into HashStakers. It has been announced that 90% of Hashlets have been
converted. Most of the remaining Hashlets are unprofitable, except Genesis (SHA256) and Prime (due to a "Double Dip" feature that allows 12 hours per day of additional 1 MH/s mining without maintenance fees).
Hashlets - promisesHashlet marketing included the following unfulfilled
claims:
- Obsolete-Proof - Adjusts to always remains (sic) profitable & never breaks down.
(no such adjustment ever happened and most hashlets have become unprofitable) - Datacenter-Optimized - Engineered to take full advantage of economies of scale.
(it was later claimed that large scale mining is more expensive due to additional costs) - Depreciating Costs - Costs decline over time, keeping your Hashlet profitable.
(no such cost decrease ever happened and most hashlets have become unprofitable) - Additionally, for all Hashlet Solos, if your target pool disbands, your Solo will automatically retarget the next most profitable pool.
(at least two of the pools are closed at this time - WafflePool and TradeMyBit - but continue to be listed on ZenMiner Cloud with fake payout rates)
Additionally it was promised that Prime Hashlets will be able to
mine SHA256 and use many different
"amps", of which only two have been implemented (Boost and Double Dip).
In an attempt to keep the profitability promise GAW is adjusting Hashlet revenues to be at least one satoshi (0.00000001 BTC) above maintenance fees, i.e. hashlets are still technically making money. However at this rate it might take about 10 thousand years to earn back the average price of a hashlet, which arguably fails any reasonable definition of profitability.
ZenMiner Cloud hostingZenMiner started by offering its
ZenController product with GAW's Generation A (Zeus-based) miners. ZenController consisted of custom mining software running on a Raspberry Pi and connecting to ZenMiner website for remote management. The product was later
abandoned.
In
July 2014 ZenMiner started offering its
Cloud hardware hosting platform, which became a successor to GAW's own hosting service. Later it included Hashlets and HashStakers. This thread
originated as a list of questions and doubts about the ZenMiner Cloud, mainly focused on the lack of roof that actual customer-owned hardware was hosted and mining.
VaultbreakerThe Vaultbreaker was GAW's attempt to compete with other vendors in producing next-generation Scrypt mining hardware. Originally announced as 500 MH/s 1.5 kW miner it was later upgraded to 750 MH/s with the same power consumption (a smaller 375 MH/s version was also offered), and was scheduled to be delivered at the end of third quarter - beginning of fourth quarter of 2014.
Unconfirmed rumors linked Vaultbreaker development with
Flower Tech, who
failed to deliver their own hardware as originally planned.
GAW CEO made a
famous promise to beat KnC and deliver the Vaultbreaker sooner than KnC would deliver its Titan. In August 2014 GAW offered to convert Vaulbreaker Batch 1 purchases to the recently announced Hashlets. In September 2014 a similar conversion program was offered for Batch 2. This was declared to fulfill the promise to beat KnC who started delivering their Titan in September 2014.
The actual Vaultbreaker hardware was never delivered, despite claims continuing up until mid-October 2014 that the project is still on time. In November 2014 GAW announced that due to problems with contracted vendors it will substitute the remaining Vaultbreakers with
other hardware, which appear to be
Alcheminer units with 7+ times higher power consumption.
GAW hostingGAW started offering
hosting options for their Scrypt hardware buyers in March 2014. Users were able to enter their own pools for the hosted hardware. The hosting service was somewhat unreliable, with problems often blamed on
hardware issues. Despite numerous requests GAW never implemented automated monitoring and relied on users to monitor and report issues with their miners.
Hosting service was discontinued in October 2014. Users were
offered a choice between having hardware shipped to them or converting it to ZenHashlets (valued at ~$10 per MH/s at the time). The shipping option could be replaced by a refund at GAW's discretion. This effectively cancelled free hosting plans, such as those offered to
Founder's Club members.
Hardware salesGAW Miners started as a
reseller of Gridseed Scrypt miners in March 2014. It claimed to have become
one of Gridseed's largest resellers in April 2014, but soon thereafter the relationship appeared to
deteriorate due to
pricing issues.
In May 2014 GAW announced their
own line of Scrypt miners, which turned out to be
rebranded Zeus hardware. It continued to sell Zeus miners including hosted hardware until Hashlets were announced in August 2014. GAW also sold hardware from other vendors such as Innosilicon and Bitmain. After transitioning to cloud mining it continued to sell used hardware through
oneminer.com website.
