The Texas State Securities Board (TSSB) recently issued cease-and-desist orders to two separate cryptocurrency mining companies operating in the state.
According to the TSSB, AWS Mining had offered “crypto mining power contracts” that guaranteed a 200% profit. Returns from the operations are to be deducted 20% as service fee, and to be deposited in wallets provided by MyCoinDeal, another respondent, which charges its own transaction and deposit fees.
In its website, the company states that its mining farms are located in Russia, China, and Paraguay.
The TSSB said that the business has a multilevel marketing network of sales agents, who are offered six different types of bonuses and commissions.
“Although potential investors are led to believe they will receive a 200% 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,” the state regulator said, adding that “their conduct threatens immediate and irreparable harm to the public.”
Moreover, the respondents had not been registered by the state to operate nor to sell securities, and failed to disclose to investors the risks in investing in cryptocurrencies.
Exy Crypto, on the other hand, had published advertisements on LinkedIn, promising investors a 10% weekly return. Clients are offered different plans, from Bronze to Platinum, depending on the amounts invested, with a 25% weekly return for Platinum investors.
Of the client testimonials on the Exy Crypto website, the TSSB said, “Respondent EXY Crypto is using photographs that do not actually portray investors of Respondent EXY Crypto and falsely attributing testimonials to these persons.”
The securities regulator also criticized the company for claiming people’s investments were “100% safe and secure,” yet not describing how it would return the invested amount in case its mining operations do not yield returns as anticipated. Like AWS Mining, Exy Crypto had also not been registered by the state.
Both AWS Mining and Exy Crypto were informed that they could request a hearing to modify or set aside the orders.