The largest cloud mining company Genesis Mining has been told to stop its activity in the state of South Carolina, according to a cease-and-desist order released on March 9.
Genesis Mining and a second company, Swiss Gold Global Inc., were named in the order, which says that mining contracts sold to state residents are considered securities.
The Securities Commission of South Carolina alleged that Swiss Gold Global acted as a broker-dealer for Genesis, but that it wasn’t registered in the state to offer securities.
«At all times relevant to this order, Respondent Genesis Mining constantly offered investment opportunities in Mining Contracts to South Carolina residents through its website. 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».
Through the contracts, buyers purchase an amount of computing power over a period of time that is hosted elsewhere, as opposed to owning mining hardware themselves. According to the Commission’s view, they constitute investment contracts and are thus securities under South Carolina law.
According to the document, Genesis Mining and Swiss Gold Global were ordered to stop doing business in South Carolina. Besides that, both Genesis and Swiss Gold Global were barred from offering any securities in the state in the future.
However the companies have the opportunity to a request a hearing with state officials to present their side.