The Securities Commissioner of South Carolina has served Genesis Mining with a Cease and Desist as it was deemed to be offering “unregistered securities” in South Carolina. The Securities Commissioner department have classed the two-year investment contracts offered by Genesis Mining to resemble securities.
There has been a flurry of activity from the main U.S. regulatory bodies over the past few weeks. The CFTC, SEC and FinCEN groups have released letters and notices that state various entities are violating securities laws; ICOs, exchanges and crypto businesses have been affected.
The South Carolina Securities Commissioner deemed Genesis Mining cloud contracts to constitute securities primarily because of the expectation of profits. An excerpt from the Cease & Desist notice reads:
“Investment contracts constitute securities, and an investment contract includes an investment of money in a common enterprise with the expectation of profits to be derived primarily from the efforts of a person other than the investor.”
The Cease and Desist went on to clarify that promoting or selling a security within the state is a violation of state securities law. It also states that Genesis Mining Ltd were acting as a unregistered broker-dealer. Altogether Genesis Mining Ltd and its affiliated company Swiss Gold Global Inc are accused of breaking the following laws:
- S.C. Code Ann. 35-1-301 – It is unlawful for a person to offer or sell a security in this state unless that security is a federal covered security, exempt from registration, or registered.
- S.C. Code Ann. 35-1-401(a) – Acting as an unregistered broker-dealer.
- S.C. Code Ann. 35-1-402(d) – Swiss Gold Global employed or associated with an unregistered agent (Genesis Mining Ltd).
Genesis Mining Farm
South Carolina state has ordered that both Genesis Mining Ltd and Swiss Gold Global, Inc cease and desist from transacting business in the state. Furthermore, both parties have been permanently barred from participating in any aspect of the securities industry in the State of South Carolina.
It appears that many states are taking crypto regulation into their own hands. Texas Securities Commissioner (TSC) signed an Emergency Cease and Desist Order to stop Bitconnect from operating within the state on January 4th. This worked effectively and for a multitude of reasons, mainly the fact Bitconnect was a Ponzi scheme the operation has now collapsed.
Despite state level regulation having its benefits there are worries that this will confuse the regulatory stance of the U.S. into many contradictory policies. What is certain is that on the whole the U.S. will be taking a more stringent approach to regulation in the crypto industry in contrast to the relative ‘safe-havens’ that are Switzerland and Gibraltar.