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.
To date, state officials have sent orders to a number of firms, most recently the one behind a cryptocurrency endorsed by film actor Steven Seagal.
The full cease-and-desist order can be found below:
State flag image via Shutterstock
DISCLOSURE
Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.
Learn more about Consensus 2023, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.