Cloud mining service Genesis Mining has been told to stop operating in the state of South Carolina, according to a cease-and-desist order released on March 9.
The Securities Commission of South Carolina alleged that Swiss Gold Global acted as a broker-dealer for Genesis, but that it hadn't registered in the state to offer securities.
Through the contracts, buyers essentially purchase an amount of computing power over a period of time that is hosted elsewhere, as opposed to owning mining hardware themselves. In the Commission's view, they "constitute investment contracts and are thus securities" under South Carolina law.
Both firms were ordered to stop doing business in South Carolina, according to the document. Additionally, both Genesis and Swiss Gold Global were permanently barred from offering any securities in the state in the future. That said, the companies have the opportunity to a request a hearing with state officials to present their side.
The move represents the latest cryptocurrency investment-related cease-and-desist order to come out of a U.S. state regulator in recent weeks.
The full cease-and-desist order can be found below:
State flag image via Shutterstock
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is an award-winning media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. In November 2023, CoinDesk was acquired by Bullish, a cryptocurrency exchange, which in turn is owned by Block.one, a firm with interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets including bitcoin and EOS. CoinDesk operates as an independent subsidiary, and an editorial committee, chaired by a former editor-in-chief of The Wall Street Journal, is being formed to support journalistic integrity.