Regulators from South Carolina recently issued a Cease and Desist against Genesis Mining, which calls itself the “largest cloud Bitcoin mining company.” Mailed today, the Administrative Order explored arguments against the continuation of the project’s current practices and concluded on its legal definition.According to findings from the Securities Commissioner of South Carolina in the matter of Swiss Gold Global and Genesis Mining, the services that Genesis offers are securities, meaning they were sold in violation of South Carolina legislature.Purportedly, nearly a million customers use Genesis Mining’s cloud services, making it one of the world’s largest digital currency mining companies. Genesis Mining is also the co-founder of HIVE, a large publicly traded Vancouver-based mining operation.
As stated in the Administrative Order, the South Carolina Uniform Securities Act governs the offer and sale of securities in the state. This is similar in many parts of the world, with the Securities and Exchange Commission (SEC) further outlining how securities must cooperate with regulators.The difficulty, however, comes when attempting to concretely define a security. Currently, many projects within the space operate in a ‘gray area’ where clear regulation is yet to be established. In this sense, the Securities Commissioner’s decision could provide insight on where legal definitions are drawn. “Investment contracts constitute securities,” it stated. “An investment contract includes an investment of money in common enterprise with the expectation of profits to be derived primarily from the efforts of a person other than the investor.” However, these definitions vary in different parts of the world and throughout various states in the U.S. Regardless, unless otherwise exempt, it is illegal to sell a security in many parts of the world without it being registered. With the classification of its cloud mining contracts as a security, this places Genesis in violation of South Carolina law.
Ultimately, the decision places emphasis on a general lack of clarity that exists when considering the global digital currency industry. As regulators across the world attempt to adapt policies to new concepts like digital currency mining, the path to clarity could still be far away. In Canada, blockchain companies like Leadweb expressed the need for clearer legal definitions and regulation in the country, which would allow companies to better comply with their obligations. The company’s CEO, Louis Cleroux, explained that there is still a long way to go before companies within the digital currency industry are able to easily operate within the margins of regulators. For Genesis Mining, it is currently unclear how this decision will affect the company or similar projects moving forward.Image credit: Genesis Mining logo
Buy Bitcoin, Ethereum, XRP, and other cryptocurrencies on Coinsquare.
[maxbutton id="2"]
