The US Securities and Exchange Commission (SEC) has filed a memorandum of law in support of its motion for default judgment against GAW Miners and ZenMiner, CoinDesk reported. In January, the SEC filed a motion for ‘Entry of Default’ in the ongoing case against the two Connecticut-based Bitcoin mining companies.

The filing says, “The Commission respectfully requests that this court enter final judgment against defendants GAW Miners and ZenMiner and that that judgment permanently enjoin those entities from future securities law violations and order them to pay disgorgement and prejudgment interest of $10,384,099, and an appropriate third civil penalty.”

The Commission, in its investigations, had found that from August 2014 to December 2014, CEO Josh Garza and his companies sold $20 million worth of purported shares in a digital mining contract, dubbed as Hashlet. Over 10,000 investors purchased Hashlets. The investors were misled to believe they would share in returns earned by the Bitcoin mining activities, but in reality GAW Miners directed little or no computing power toward any mining activity. Most Hashlet investors never recovered the full amount of their investments, and few made a profit.

“[B]oth GAW Miners and Zen Miner engaged in serious violations of the federal securities laws by virtue of their scheme to oversell Hashlets well beyond their available computing power to manufacture a customer interface to mislead investors into thinking that they were receiving returns from virtual currency mining”, the document read.

In December, the SEC charged the two companies and Garza for operating a Ponzi scheme. However, as neither of the companies filed an answer or otherwise responded to the Complaint within the stipulated time period, the Commission filed a motion for ‘Entry of Default’ in its ongoing case against the companies.