After five long months of working with South Carolina officials, Genesis Mining has been dropped from the cease and desist order it received back in March 2018 from the South Carolina Securities Division. The company will relaunch to U.S.-based customers shortly. This marks one of the first times a blockchain company has fought back against regulators and been successful.
Shah Hafizi, chief compliance officerCOO and general counsel at Genesis Mining, released the following statement:
“We are happy to announce that the South Carolina securities division has dismissed Genesis Mining from its March 9, 2018, cease and desist. One of our company[‘s] principles is transparency. After all, it is a core value of blockchain technologies. Over the past five months, we’ve worked closely with South Carolina officials to educate them and provide a practitioner’s perspective on mining, blockchain networks and the decentralized nature of the technologies we support.”
He continued on to say, “By working together with regulators, we can ensure that investors are protected, and innovation is not stifled. We believe for the industry to reach its true potential, companies and regulators need to collaborate. We strongly encourage blockchain companies, regardless of where they are in the world, to proactively engage with local regulators at all levels.”
Hafizi joined the Genesis Mining staff back in April 2018. He previously served as the chief compliance officer at BlackRock, Inc., a global investment management firm, where he oversaw both digital and technology ventures. Amongst his duties with Genesis Mining is leading the company’s global regulatory and government affairs. He also works to shape the business’s compliance framework and support its initiatives in the Americas.
When Genesis Mining was first issued the cease and desist, mining contracts sold to residents were considered securities. According to the state’s Securities Commission office, Swiss Gold Global — which was also named in the cease and desist — was alleged to be working as a broker-dealer for Genesis Mining. Representatives stated that the company wasn’t registered in South Carolina and was therefore unauthorized to offer or sell securities to residents.
Buyers were able to purchase specific amounts of computing power over certain periods that were then hosted on third-party platforms. This constituted investment contracts or securities per the Commission office. Authorities then barred both Genesis Mining and Swiss Gold Global from doing business within the state, and both companies were barred from offering securities in South Carolina in the future.
Tracy Meyers, the deputy securities commissioner, announced the end of the cease and desist on July 26, 2018:
“The Securities Division of the Office of the Attorney General of the State of South Carolina, after receiving information regarding matters detailed in the Administrative Order to Cease and Desist issued … upon due consideration of such information, finds good cause has been shown to vacate the [order].”
Founded in 2013, Genesis Mining is one of the largest companies providing cloud mining services to blockchain companies. Based in Iceland, it is allegedly among the nation’s largest consumers of electricity.
At press time, the cease and desist order against Swiss Gold Global remains active.
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