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Why is Texas Taking Actions Against Digital Coin Mining Promoters?

Why Is Texas Taking Actions Against Digital Coin Mining Promoters?

Texas authorities are left with no alternatives but take actions against the mining promoters of cryptocurrencies in the State. Texas Securities Commissioner, Travis Iles has resorted to an emergency decision that focuses on the network of companies. His contention is that these companies have been offering virtual currency investments fraudulently to the residents of the State. The move necessitated due to increasing scams in the emerging sector even as the prices are trending towards the downtrend.

Three Companies

Texas Securities Commissioner has issued cease and desist order against three companies, Mintage Mining LLC, Symatri LLC and NUI Social for alleged fraudulent methods to lure investors. Significantly, all the three companies are controlled by Utah based Darren Olayan. This apart, Wyatt McCullough’s name was also found in order for his association with NUI Social. The third individual to find a place in the order was William Douglas Whetsell. Both McCullough and Whetsell were held responsible for publishing ads that are focused on residents of Texas. The published ads offered a maximum return of 250 percent a year through the mining of digital coins.

Aside from these issues, the order also charged the three companies of violating regulations, financefeeds.com reported. Citing Mintage and Olayan mining, the order pointed out the violation of making misleading claims to the public. The ads conveyed to investors that Mintage is complying with the securities laws of Texas and that its aim was to stay ahead of the regulation in respect of digital coins. These firms have also claimed that they were in regular touch with legal firms to comply with regulatory norms.

Additionally, Symatri is not ready to disclose any material information in respect of its digital coin value, i.e., Kala. The company is also not ready to offer any data on the risk factors in the hardware meant to mine the virtual asset. Significantly, the emergency order issued by the regulator pointed out that these companies’ investment vehicles were not registered in Texas to sell as securities.

This apart, these investments were also not eligible for an exemption from the registration process. Mintage Mining is charged with offering two different investments through unlawful means in the name of cryptocurrencies mining. Similarly, Symatri offered investors to possess pre-configured hardware to allow mining of Kala. NUI Social is a multi-level marketing firm with over 300,000 members across 140 countries. Its scheme is termed as a sign of a Ponzi scheme.

Not the First Time

This is not the first time that Texas regulator has taken actions against those involved in cryptos either directly or indirectly. For instance, the State has cracked its whip in February against LeadInvest. The company claimed to be a “technology company that specializes in the development of trading software in the Forex market and the Bitcoin currency.”

The State was one of the participants in “Operation Cryptosweep,” and that drove close to 70 inquiries and investigations. The regulator has taken actions at least in 35 cases in respect of initial coin offerings or any other virtual assets in May alone. Still, there are pending cases.

About the author

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Pamela Morgan

Pamela Morgan studied computer science from Massachusetts Institute of Technology (MIT). During her academic years, she has produced a significant number of high-impact scientific publications in the field of blockchain. Her research focuses on models of crypto security and DApps.

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