The Australian-based cloud mining company AWS Mining PTY LTD is in hot water with the Texas State Securities Board for selling unregistered securities.
According to an official notice that was filed on November 6, AWS has received a ceased and desist order from the board pertaining to the issue.
Violation of Securities Act
As noted in the document, AWS Mining, its chief marketing officer Josiah Kosek and many of its agents have allegedly violated the Texas State Securities Act.
The violation pertains to the company and their aforementioned accomplices that have supposedly lured Texas residents into buying the company’s unregistered cloud mining contracts. They promised their customers a massive “200 percent passive return on every instrument” which never came to fruition.
This violation was in tandem with offering investors access to a multi-level marketing program where they could become sales agents and make commissions on further sales.
It is alleged that AWS failed to fulfil its promises of paying out the profits and used the statement “Investors assume the risks associated with the investment,” to get out of paying. They also failed to register as a securities broker and also to register their crypto mining power contracts.
Conflict of Interests
AWS are also accused of a conflict of interests. They required investors to get a MyCoinDeal digital currency wallet so they could take part in the firm’s mining program. Investors were expected to pay fees for receiving the wallet and also to begin transactions.
What investors didn’t realize was that AWS Mining PTY owns MyCoinDeal and they reportedly failed to inform investors of this. They apparently also withheld information in regards to the storing methods used to keep the crypto, leaving the customers open to hacks and malware.
Investors were allegedly left in the dark and didn’t even receive any background information in regards to commissions they would receive from selling the products for AWS.
In light of the issued cease and desist order by the Texas State Securities Board, AWS now has 30-days to respond by requesting a hearing with the Securities Commissioner to explain themselves. If they do not respond, the order will be finalized and cannot be appealed.