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Texas Regulators Enter Emergency Stop Against Crypto Mining Firm
The Texas State Securities Board issued an emergency cease-and-desist against a company it claims committed fraud in offering crypto mining contracts.
By Nikhilesh De
Updated Sep 13, 2021, 8:34 a.m. Published Nov 6, 2018, 9:30 p.m.
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The Texas State Securities Board entered an emergency cease-and-desist on Tuesday against a cloud mining company based in Australia that it said was selling unregistered securities.
In the order, Texas securities regulators claim that Automated Web Services Mining (otherwise known as AWS Mining), AWS Mining PTY LTD., a number of of AWS Mining's officers, crypto wallet provider MyCoinDeal, and multi-level marketing organization AWS Elite were violating the state's Securities Act and committing fraud by selling investment contracts in AWS' cloud mining pool.
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According to the filing, the respondents promised investors a 200 percent return on any purchases made, using a multi-level marketing organization to sell mining power contracts.
However, after investors signed on, the company downplayed the profit they would see, the document said. It explained:
"Although potential investors are led to believe they will receive a 200 [percent] return on principal invested in crypto mining power contracts, Respondent AWS Mining is now disclaiming the guarantee of profitability and instead representing that investors assume the risks associated with the investment."
Further, investors were required to use a crypto wallet created by MyCoinDeal, which charged a fee for any transactions that users conducted.
These fees include a 2 percent charge for all fiat deposits, 2 percent for fiat withdrawals, and anywhere from 0.5 to 1 percent for trading cryptocurrencies.
Overall, the companies failed to register as dealers or agents for securities offerings and similarly did not register its contracts as securities, according to the document. The respondents also mislead investors and essentially committed fraud.
Because "respondents' conduct, acts and practices threaten immediate and irreparable harm," the document orders all respondents to immediately cease selling any securities in Texas, as well as engaging in any potentially fraudulent or otherwise misleading activities.
AWS Mining and its affiliated parties have 31 days to request a hearing on the charges. If the companies fail to do so, the emergency cease-and-desist will become a final one.
AWS Mining did not immediately respond to a request for comment.
Texas flag image via Shutterstock
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