Cease and desist order on Genesis mining in South Carolina

[pinkflower]

This could become a precedent for other states in the US to follow and order their own cease and desist orders on Genesis and other cloudmining sites that are selling contracts.

Maybe the regulators should also investigate them for false advertising lol.

Crypto Miner Genesis Hit With Cease-and-Desist Order

• Through the contracts, buyers essentially purchase an amount of computing power over a period of time that is hosted elsewhere, as opposed to owning mining hardware themselves. In the Commission's view, they "constitute investment contracts and are thus securities" under South Carolina law.
  
  
• Both firms were ordered to stop doing business in South Carolina, according to the document. Additionally, both Genesis and Swiss Gold Global were permanently barred from offering any securities in the state in the future. That said, the companies have the opportunity to a request a hearing with state officials to present their side.
  
  
• The move represents the latest cryptocurrency investment-related cease-and-desist order to come out of a U.S. state regulator in recent weeks.

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[buwaytress]

Finally. Finally someone got to strike a blow against one of these cloud mining operators. Genesis, no less, can't get bigger nor older than that. The only thing unsatisfactory about this is that they're just ordered to stop for a service that contravenes regulations, rather than an outright defrauding business, which they are very, very close to resembling.

Hopefully, this investigation does reveal more about the whole shadiness of cloud mining. False advertising, like you said. Misrepresentation of information. Obscure and vague operational costs. Unfair and abrupt termination of contracts. The list goes on.

[leopard2]

USA shooting themselves in the foot IMHO

soon only "free" countries like Russia or Iran can do ICO's and issue securities on the blockchain (and by free I mean not under US jurisdiction)

so basically money will flow outside of USA. The tokens of course are ETH20 and do not care about borders.

US citizens, no longer able to buy good quality blockchain securities, will have to buy fishy ones from Russia. But maybe they won't be so fishy after all? Uncle Putin is pampering blockchain for a reason, he possesses wisdom the three letter agencys do not possess.  

Soon window makers will get a cease and desist because windows allow you to use daylight without having your own sun, they generate passive income and must be securities....

[tmfp]

Genesis say

We are monitoring the situation and are currently reviewing the case with our US legal team.
We have no further update at this time but will provide one immediately once we do.

Cloudmining and the Howey Test were always going to have problems, but Genesis brought this on themselves by using a seedy MLM "bullion" house like Swiss Gold Global to resell their mining packages in the US.

[leowonderful]

Finally. Finally someone got to strike a blow against one of these cloud mining operators. Genesis, no less, can't get bigger nor older than that. The only thing unsatisfactory about this is that they're just ordered to stop for a service that contravenes regulations, rather than an outright defrauding business, which they are very, very close to resembling.

Hopefully, this investigation does reveal more about the whole shadiness of cloud mining. False advertising, like you said. Misrepresentation of information. Obscure and vague operational costs. Unfair and abrupt termination of contracts. The list goes on.

The fact that this article was even posted on Coindesk is good as it'll hopefully make people realize how risky cloud mining really is; I'm honestly surprised so many people are still buying into cloud mining today and how popular it is, even on these forums though we tell people not to invest into cloud mining at all (and to be ready to lose everything if an investment is made).

There's so many alternatives to cloud mining like just simply getting a miner hosted at a colocation (yes, many reputable colos today are at capacity, but it's still possible to find hosting space rather easily) today that no sane person should ever consider cloud mining. Can't wait 'till the day cloud mining isn't available to US residents.

[timerland]

It's a good thing that they're doing this.

A lot of newbies to the crypto scene will think that investing in cloud mining is a good investment decision to make. However, that's probably as far from the truth as it can be. Not only do some providers make it sound extremely profitable when in reality, it really isn't, you also have no idea whether they are running a ponzi scheme or not due to the fact that there is no proof of equipment ownership.

Hopefully more states and countries can do this, instead of putting bans on cryptocurrency itself... And cloud mining becomes somewhat regulated at least, to ensure that audits are carried out to see if sites are actually mining.

[Reatim]

Probably a good step on curbing out the bad eggs amongst the cryptoverse. I'm sure that this will really set a precedent and will sent shockwaves and a message to those cloud mining sites who's goal is to really scam and take off the money of the investors.

We have been hearing a lot of how many scams those cloud mining sites are and yet there are still willing to invest on them. But with this news, scammers will likely think twice not to pursue their goals anymore. This is a welcoming news indeed.

[carlfebz2]

Probably a good step on curbing out the bad eggs amongst the cryptoverse. I'm sure that this will really set a precedent and will sent shockwaves and a message to those cloud mining sites who's goal is to really scam and take off the money of the investors.

We have been hearing a lot of how many scams those cloud mining sites are and yet there are still willing to invest on them. But with this news, scammers will likely think twice not to pursue their goals anymore. This is a welcoming news indeed.

These things would really tingle in their own ears and might doubt on launching their own scam cloud mining site.There are already thousands of newbie or investors who do lose up money because of these scams and now Genesis is having a cease and desist order which is good in my own view.Giving out warning that these things should be regulated further more to protect people.

[BitHodler]

It's a first conservative step, but one that I am very pleased with. If this approach gets deployed on a more global level, it's just a matter of time before this scheme starts to evaporate.

Negative consequences are that people will lose their money, but on the other hand, investing in cloud mining is a losing game anyway, so it levels itself out nicely, and for that reason I am not that bothered.

In the end, people are responsible for their own actions, and a complete shut down, or the service taking a run with people's money, is a very realistic scenario, and thus part of the risk you expose yourself to.

[shellyfinest]

Probably a good step on curbing out the bad eggs amongst the cryptoverse. I'm sure that this will really set a precedent and will sent shockwaves and a message to those cloud mining sites who's goal is to really scam and take off the money of the investors.

We have been hearing a lot of how many scams those cloud mining sites are and yet there are still willing to invest on them. But with this news, scammers will likely think twice not to pursue their goals anymore. This is a welcoming news indeed.

Agreed, but the problem is it seems like Genesis and Hashflare were a few of the legit non-scammy cloud mining services... at least by having hardware and real contracts, not counting the fact that they wiped out "lifetime contracts" late last year in favor of 1 year contracts.... that was a huge problem...

I will follow developments because I'll be interested to see if it holds up

[swogerino]

Probably a good step on curbing out the bad eggs amongst the cryptoverse. I'm sure that this will really set a precedent and will sent shockwaves and a message to those cloud mining sites who's goal is to really scam and take off the money of the investors.

We have been hearing a lot of how many scams those cloud mining sites are and yet there are still willing to invest on them. But with this news, scammers will likely think twice not to pursue their goals anymore. This is a welcoming news indeed.

Agreed, but the problem is it seems like Genesis and Hashflare were a few of the legit non-scammy cloud mining services... at least by having hardware and real contracts, not counting the fact that they wiped out "lifetime contracts" late last year in favor of 1 year contracts.... that was a huge problem...

I will follow developments because I'll be interested to see if it holds up

That is exactly their mask for scamming. I am very glad to hear the news from a powerful country like the USA to start doing something against these scammers. Yes they are scammers because they advertise that you will ROI and make a bit of extra money on top of the ROI on many social media like facebook. In facebook there are a lot of users, knowledgeable and not knowledgeable so it is the perfect network to fish for victims.

The ugly truth is that no one has ever made money with Genesis or whatever other cloud mining, even Genesis can have real hardware running this does not guarantee the user will ever make ROI with them. They bring in the fact that network difficulty and maintenance costs have risen and they delay your ROI for a few more months. After these few more months they come up with the same excuse and this time they tell you if you had the miner at home you would have shut it down for being not profitable so they shut down your virtual miner and you never make ROI with them.

Thumbs up for USA this time.

[pinkflower]

USA shooting themselves in the foot IMHO

soon only "free" countries like Russia or Iran can do ICO's and issue securities on the blockchain (and by free I mean not under US jurisdiction)

so basically money will flow outside of USA. The tokens of course are ETH20 and do not care about borders.

US citizens, no longer able to buy good quality blockchain securities, will have to buy fishy ones from Russia. But maybe they won't be so fishy after all? Uncle Putin is pampering blockchain for a reason, he possesses wisdom the three letter agencys do not possess.  

Soon window makers will get a cease and desist because windows allow you to use daylight without having your own sun, they generate passive income and must be securities....

No. We also could be overestimating "blockchain technology" and getting ahead of ourselves. Maybe we even are circle jerking ourselves to delusion lol.

But whoever's opinion is right doesnt matter. Its the market who decides if an ICO makes it.

[tmfp]

Streng has replied to the order in a bullshitty language press release, theme "We are Special".

The Tl:dr is that they will be complying with the cease and desist in S Carolina and appear to have no intention of registering themselves and their products to comply with the State law under which the C&D order was issued, despite the S Carolina law being essentially similar to Federal Law and that of other States.
Registration would mean they would have to behave like any legit business that offers investment/passive income opportunities and provide audited accounts, detailed reports of their operations and breakdowns of the sources of profits and dividend payments made.
Instead, they're going to pour your money into the Government Lobbying Machine.

Our intention is to ensure that innovation is not stifled

where innovation=ability to do what the fuck we like.

https://blog.genesis-mining.com/the-importance-of-collaboration

[Paractor]

This is exactly how it started with bitconnect. A cease and desist order then they swarmed in and closed them down.
But since this is a hardware based operation it can maybe end up differently then what happened to them in announcing they had to close up.

[RamonBTC]

I have no grudge with genesis in particular, but cloud mining sites must have been closed for business for a long time. It’s been known that it’s unworthy to invest in and have big tendency for closure intentionally or unintentionally without notice or return of investment to investors. I have lost fate when you’ve been a victim once in your life. South Carolina does what is just right.

[leopard2]

it is not closed because it is bad

it is closed because it is a security

Industrial mining is profitable so why should shares in a mining co. not be profitable? The government does not filter out the bad actors, they prohibit all blockchain securities because they can be owned anonymously

In the end crypto investors end up with unregulated black or grey market junk while the good companies are owned by Wall Street....

[pinkflower]

it is not closed because it is bad

it is closed because it is a security

Industrial mining is profitable so why should shares in a mining co. not be profitable? The government does not filter out the bad actors, they prohibit all blockchain securities because they can be owned anonymously

In the end crypto investors end up with unregulated black or grey market junk while the good companies are owned by Wall Street....

The word bad is too much of a general term. But I would say they are "bad" because of false advertising. These contracts are not profitable and they dont benefit the buyer. What it really does is benefit Genesis because they are hedging their bets by selling all the risk to the buyers in the form of "mining contracts".

[deborajranette]

About South Carolina and its implications, here you have info: https://cryptocomes.com/genesis-mining-hit-with-cease-desist-order-by-south-carolina-regulator-major-implications