Crypto Mining Platform Genesis Mining Hit With Cease and Desist Order In South Carolina

News, Regulation | March 13, 2018 By:

The South Carolina Attorney General’s Office Securities Division has issued a cease and desist order against crypto cloud mining platform Genesis Mining.

Genesis Mining, which is registered in Hong Kong, calls itself the “largest cloud bitcoin mining company.” Their services allow customers to purchase mining contracts, which allow them to mine bitcoin and altcoins through a cloud-based computer network. The company’s mining farms are based in Iceland, Canada, and Bosnia.

According to the cease-and-desist order, Genesis Mining, along with Zurich-based partner enterprise Swiss Gold Global, illegally served residents with unregistered mining contracts. The regulators deemed Genesis Mining cloud contracts to constitute securities primarily because of the expectation of profits.

“Investment contracts constitute securities, and an investment contract includes an investment of money in a common enterprise with the expectation of profits to be derived primarily from the efforts of a person other than the investor,” the order reads.

The regulators alleged that while Swiss Gold Global acted as a broker-dealer for Genesis Mining, it had not registered in the state to offer securities.

“At all times relevant to this order, Respondent Genesis Mining continuously offered investment opportunities in Mining Contracts to South Carolina residents through its website,” the order states. “At no time relevant to the events stated herein was Respondent Swiss Gold Global registered with the Division as a broker-dealer, and no exemption from registration has been claimed by Respondent Swiss Gold Global.”

The regulators ordered the two companies to stop doing business in South Carolina. Additionally, both Genesis and Swiss Gold Global were permanently barred from offering any securities in the state in the future.

The order marks the latest in a string of US state-level requests for crypto-related companies to halt their services. Last month, the Enforcement Division of the Texas State Securities Board (TSSB) issued cease and desist requests to three crypto-related companies for offering unregistered securities. These include Panama-based crypto firm LeadInvest, Hong Kong-based firm R2B Coin and crypto lending platform DavorCoin.

Last week, the New Jersey Bureau of Securities issued an emergency order to stop Bitcoiin, an initial coin offering (ICO) endorsed by movie star Steven Seagal, from offering unregistered securities in the state.