The securities division of South Carolina has investigated “alleged activities” in mining companies Swiss Gold Global and Genesis Mining, eventually ordering them to cease and desist on March 9th 2018.
According to the official document, the mining contracts offered by Genesis are presented to South Carolina residents through Swiss Global. Under the South Carolina Uniform Securities Act of 2005, any investment contract which promises profit by investing money “from the efforts of a person other than the investor” is considered a security. So, these mining contracts are securities which were not registered legally.
It is unlawful for a person to offer or sell a security in this State [South Carolina] unless that security is a federal covered security, exempt from registration, or registered.
The Mining Contracts offered and sold by the Respondents [Swiss Gold Global and Genesis Mining] constitute investment contracts and are thus securities as defined by the Act.
Violation of this act is the reason why both companies have been asked to stop issuing mining contracts immediately. They have thirty days to request a hearing, otherwise they will have to move forward with the order and pay a “civil penalty”. They are also permanently prohibited from offering any more securities in South Carolina in the future.
Hong Kong based company Genesis Mining has not responded to the story – they have been updating their Twitter followers with information regarding hash power and Ether payouts.
1/2 UPDATE: All Our Hashpower Is SOLD OUT.
In the meantime we’re optimizing our infrastructure and working on ramping up new mining hardware. pic.twitter.com/WLnONzIHwO
— Genesis Mining (@GenesisMining) March 12, 2018
Genesis’ customers have been using Reddit and Twitter to call the company a scam, since many people have not received their payments from February 2018 or August 2017. Many investors are claiming that their fraudulent behavior is the reason why South Carolina came to such a conclusion.
When you don't respect your investors money, this is going to happen. Delayed payments has got the attention in one state. This will spread to other states as well and even other countries. And you think the mining contracts got Sold Out overnight?
— Bharat Karnani (@BharatKarnani) March 12, 2018
Swiss-based company Swiss Gold Global has taken a similar stance and avoided commenting on the cease and desist order on its social media accounts.