The South Carolina Attorney General’s office, which oversees securities regulations in the state, has published two orders vacating a cease and desist order against ShipChain and another complaint filed against mining firm Genesis Mining in March. The moves mark the first time such orders have been dropped against blockchain startups in the state.
According to the regulator, the mining contracts from Genesis Mining and the tokens from ShipChain should have been registered as securities, but they were not. ShipChain decided to speak up against the claim in May, issuing a statement that said they did “not believe [its] tokens were securities.” They added that they did not know that South Carolina constituents could even buy their SHIP tokens.
Tracy Meyers, the deputy securities commissioner, wrote on Thursday about this case. Regarding, ShipChain, she said:
The Securities Division of the Office of the Attorney General of the State of South Carolina, after receiving information regarding matters detailed in the Administrative Order to Cease and Desist issued … upon due consideration of such information, finds good cause has been shown to vacate the [order].
Similarly, Genesis Mining was also released from its cease and desist order. Swiss Gold Global, which was charged with acting as an unregistered broker-dealer for Genesis Mining at the same time, was not however.
Genesis Mining took to their Twitter account to post:
Startups on the move
According to Cointelegraph, ShipChain raised $30 million in a private token sale in January. The company was launched in California in 2017 and is attempting to disrupt the shipping industry by solving the major problems associated with the logistics industry. The publisher indicates that the shipping industry loses more than $50 billion annually from lost or stolen cargo.
Genesis Mining is not a new name to the crypto enthusiasts. The company is based in Iceland and is one of the biggest companies offering cloud mining services in the world – with a primary focus on Bitcoin. It was founded in late 2013 and the company’s mining farms are reportedly the largest consumers of electricity in Iceland. It has been pursuing an expansion strategy in recent times, launching bases in different countries and US states, despite numerous hiccups on the way.
South Carolina regulators are not the only ones pursuing blockchain startups that have issued tokens to the public. Reports from Switzerland indicate that the Swiss Financial Market Supervisory Authority (FINMA) launched enforcement measures against crypto mining firm Envion AG over its potentially unauthorized token sale in mid-January 2018. It is clear that the legal uncertainty over crypto assets is making it harder for blockchain startups to identify whether their tokens are securities.
Should security regulators come up with clearer guidelines? Share with us in the comments section.