Wall Street Exec Sued for Role in Fraudulent Cryptocurrency Scheme

Investors in GAW Miners sued Stuart Fraser for his role at the defunct firm following a guilty plea of wire fraud by his longtime partner, Josh Garza.

Nov 9, 2017 at 5:04 a.m. UTC
Updated Sep 13, 2021 at 7:08 a.m. UTC

Four investors in GAW Miners have sued Stuart A. Fraser for his role at the defunct crypto business, following a guilty plea of wire fraud by his longtime partner, Josh Garza.

In a complaint first filed in the U.S. District Court for Connecticut last year, the plaintiffs accused Fraser, GAW Miners and ZenMiner of violating federal and state securities laws.

Fraser, the vice chairman of Wall Street firm Cantor Fitzgerald, subsequently filed a motion to dismiss all the allegations, which the court denied, according to a ruling dated on Oct 11.

The plaintiffs, Denis Marc Audet, Michael Pfeiffer, Dean Allen Shinners and Jason Vargas, stated in the complaint that Fraser had a "deep involvement with Garza and GAW Miners."

This relationship assisted Garza when he made a series of false statements to prospective customers and investors, such as GAW Miners' "phony" acquisition of ZenMiner, the complaint says.

Fraser's lawyer, Daniel H. Weiner from Hughes Hubbard & Reed LLP, told CoinDesk:

"This is the initial phase of the case. We look forward to disprove the litigation as the case progresses."

In their civil suit, the plaintiffs cited Fraser's long-time personal and business mentorship and relationships with Garza, and his engagement in the GAW Miners business, including making operational decisions and representing GAW Miners in third-party negotiations.

Fraser was also accused of leveraging his previous position at Cantor Fitzgerald to "introduce potential investors to Garza and GAW Miners."

The four plaintiffs, who seek class-action status for their case, had purchased Hashlets, a kind of investment contract that paid returns on GAW's digital currency mining.

On July 20, Garza, the former CEO of GAW Miners, was convicted for charges that derived from his operation of GAW, GAW Miners, ZenMiner and ZenCloud, all of which were suspected of fraudulent activities.

Originally scheduled for October, the sentencing may be postponed to early next year and Garza may face a penalty of over $9 million with up to 20 years in prison. In addition, on Oct 4, a U.S. federal judge signed a final judgment holding Garza liable for $9.18 million in another case brought by the Securities and Exchange Commission less than two years ago.

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