Hartford Business Journal

www.HartfordBusiness.com December 14, 2015 • Hartford Business Journal 15 that satellite radio and streaming radio ser- vices like Pandora and iTunes can challenge listenership. About 24 percent of adults use some kind of streaming service, Kapriol said. While concerned, Salhaney isn't preoccupied by the challenge. "At the end of the day, there is more competition. I think people are using more information and media than they ever had before. But we truly believe that if we do a great local product that people will come to you," he said, adding that WTIC streams its broadcasts. The biggest threat to AM radio could come from the smartphone. Kapriol said in the near future more than 30 million smartphones will have FM chips allowing listeners to tune into any FM station in the country. "That could erode the AM listenership," he said. Harrison said that's not going to be an insurmountable problem. One technological aspect that could advance AM radio is trans- lator stations that carry their signal on the FM band. The Federal Communications Com- mission says translator stations that provide service within the primary station's protected service area classify as "fill-in" stations. Ultimately, said Hanley, the Quinnipiac professor, AM radio may not be around in two generations to come. But, he added, "The demise of radio has been coming next year for 20 years now. I wouldn't count radio out. It is still an efficient way to transmit information and consume it. With a $10 radio and 9-volt battery, you have the world." n SEC sues Bloomfield cryptocoin founder for $19M securities scheme The legal case of a defunct Bloomfield cryptocurrency startup is coming to a head. The U.S. Securities & Exchange Commis- sion this month filed suit against Gaw Min- ers and its CEO Homero Joshua Garza, and affiliated company ZenMiner, alleging he and his companies defrauded thousands of investors to the tune of at least $19 million. The SEC is ask- ing a New Haven fed- eral judge to require Garza to disgorge allegedly ill-gotten financial gains, with interest, and to pay a civil penalty. Garza is required to respond to a Dec. 2 summons by the end of the month. The SEC alleges Gaw Miners committed securities fraud and made false and mis- leading statements to potential investors about investment contracts, called Hash- lets, which were sold in 2014. More than 10,000 customers bought Hashlets and most lost money, the SEC said. Gaw had promised investors that Hash- lets, which the SEC alleged were unregis- tered securities, would always be profitable and never obsolete. In reality, the contracts became unprofitable in just three months and obsolete by January 2015, the suit said. Hashlets represented shares in profits Gaw said it would generate by using its com- puting power to mine for cryptocurrency. But in reality, the complaint alleged, Gaw sold so many Hashlets in the first week that it would have needed as much as four times the computing power to back up the contracts. "Most customers paid for a phantom piece of equipment that neither Gaw Min- ers nor ZenMiner owned," the complaint reads. "Garza was responsible for Gaw Min- ers' and ZenMiners' decision to keep selling Hashlets, despite his knowledge (or reckless and negligent disregard) that the companies lacked the computing power they purported to be selling to investors." Because it wasn't generating enough cryp- tocurrency from its mining operation, Gaw paid some investor returns using other inves- tors' money, according to the SEC, which described Hashlets as a Ponzi scheme. Garza, 30, resided in Somers for a time, but is now living in Vermont, the complaint said. He didn't respond to a request for comment. It was unclear last week if he had a lawyer yet. The SEC suit comes on the heels of several civil judgments against Gaw earlier this year. In July, a Connecticut Superior Court judge awarded a pre-judgement remedy of $205,000 to two Gaw customers. The follow- ing month, that judge granted the plaintiff's motion for default, because Garza had failed to respond to a summons. The Dec. 1 SEC complaint highlights Gaw's frequent shifts in its business model. Founded in May 2014, Gaw first oper- ated as a reseller of virtual currency mining equipment from overseas manufacturers. In the spring, the company switched to a "hardware hosted mining" model, in which the company kept in its datacenter the com- puting equipment purchased by customers, who could control how it was used for mining. In June 2014, Gaw switched to a cloud- hosted mining model, which gave custom- ers less control over how their mining power was being used. Some customers com- plained, and Gaw began urging those cus- tomers in August 2014 to convert their cloud- hosted machines into Hashlet contracts. Under the Hashlet model, Gaw owned and operated the computing power, and investors were promised a slice of the prof- its from that equipment's mining operations. After Hashlets became unprofitable, the company launched its own cryptocurrency, called PayCoin, in December 2014. The company encouraged customers to convert their Hashlet contracts to "Hash- Staker" digital currency wallets, which would hold and earn a return on PayCoins. But Pay- Coin's value tanked. Last week it was trading at around 4 cents. "In offering HashStakers to Hashlet inves- tors, GAW Miners and Garza attempted to prolong their scheme and prevent the collapse of GAW Miners," the SEC complaint said. – Matt Pilon REPORTER'S NOTEBOOK ® 83% of consumers familar with BBB are more likely to purchase when a business displays BBB's Accreditation Seal.* When consumers see the BBB Accreditation Seal they see trust. APPLY TODAY bbb.org *2014/2015 Nielsen DEPENDABLE ® P.O. Box 2468, New Britain, CT 06050 800.969.3837 nteriors.com Summer, Fall, Winter, Spring Keep your exterior colorful and festive year round with our exterior seasonal program! indoor / outdoor plantscapes • holiday decor Officially Produced by: Now available are official PDF REPRINTS of your Article for your MARKETING usage All copyright fees included Share the excitement of being published! Connecticut Green Guide, Hartford Business Journal and HartfordBusiness.com content is copyrighted. Visit HartfordBusiness. com/reprints for more info on article usage and obtaining copyright permissions. For article reprint info & pricing, contact: Jessica Baker jbaker@HartfordBusiness.com or 860.236.9998 ext. 122 or visit HartfordBusiness.com/reprints Homero Joshua Garza, CEO, Gaw Miners and ZenMiner

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