Genesis Mining, a cryptocurrency mining company established in 2013, and its marketing associate Swiss Gold Global of Switzerland, has received a cease and desist order from the securities division of South Carolina Attorney General’s office. The document filed before the securities commissioner claims that Genesis Mining and Swiss Gold Global has violated the Uniform Securities Act of 2005.
The move has caught cryptocurrency investors by surprise as the claim made by Palmetto State indicates that it considers cloud mining contracts as securities, a decision that could have serious repercussions throughout the US.
Genesis Mining is a Hong Kong based company offering cloud mining contract through its website. Its partner Swiss Gold Global offers various financial opportunities, including investment related to cryptocurrency. Specifically, Swiss Gold Global offers cryptocurrency mining contracts, which are fulfilled by its partner, Genesis mining.
Genesis Mining, with primary operations in Reykjavik, Iceland, offers mining contracts for Bitcoin, Dash, Ethereum, Litecoin, Monero, and Zcash. Investments are pooled and used for mining activities.
The petition claims that Swiss Global, which was acting as a marketing agent for Genesis Mining and offering investment opportunities, has not registered itself as a broker-dealer. Furthermore, the securities (investment contracts) were not registered with the Division or federal covered securities. An exemption from registration was not requested as well.
The filed document argues that according to the South Carolina Uniform Securities Act 2005, investment contracts are considered as securities, unless it is a federal covered security exempt from registration. Based on the above arguments, the Deputy Commissioner issued a cease and desist order to both Swiss Global and Genesis Mining. Both parties were permanently barred from offering securities in the State of Carolina.
Other states may use this as an example and issue similar orders soon.