Texas Regulator Issues Cease and Desist Order to Cloud Mining Company
Texas regulators have issued a cease and desist order to a cloud mining company for selling unregistered securities, among other alleged offences including fraudulent behavior.
The Texas State Securities Board has issued an emergency cease and desist order to an Australia-based cloud mining company AWS Mining PTY LTD for selling unregistered securities, according to an official notice filed Nov. 6.
Per the document, AWS Mining along with its multiple agents and Chief Marketing Officer Josiah Kostek have violated the Texas Securities Act by luring the state’s residents in purchasing AWS’ unregistered cloud mining power contracts and promising a “200 percent passive return on every investment.” The company’s website also reportedly offers investors to join a multi-level marketing matrix for $20, after which they could earn commissions by operating as sales agents.
AWS allegedly shirked its commitments to pay out the promised profit, stating that “investors assume the risks associated with the investment.” AWS failed to register as a securities broker-dealer, and moreover, crypto mining power contracts have not been registered and qualified for sale in Texas.
The firm purportedly required investors to secure a digital currency wallet provided by MyCoinDeal to participate in AWS’ crypto mining program, wherein the wallet developers required investors to pay fees for deployment of their wallets and conduct transactions within it.
According to the order, the defendants intentionally failed to disclose that AWS Mining PTY is the business name holder of MyCoinDeal. AWS also allegedly withheld information about its methodology for storing cryptocurrencies, and its means of accounting and implementing security protocols for customer protection from malicious attacks.
The defendants allegedly did not disclose their business data and qualifications, such as their background in selling securities to investors and dealing with cryptocurrencies, nor the commissions they would receive for selling crypto mining power contracts.
AWS now has 31 days to request a hearing with the Securities Commissioner, otherwise the order will become final and non-appealable.
Previously, the Texas State Securities Board issued an emergency cease and desist order to a network of cryptocurrency-related firms, that allegedly offered fraudulent crypto investments to state residents. According to the order, the companies were immediately suspended from offering securities in Texas until the security is registered or exempt.