An Australian company that guaranteed returns of up to 200% on investments in cryptocurrency mining is refunding money to Texas investors and admitting it illegally sold unregistered securities.
Under the Order entered Aug. 2 by Texas Securities Commissioner Travis J. Iles, AWS Mining PTY, based in Sydney, Australia, is paying 19 Texas residents the full amount of their investment minus any profits they received.
AWS Mining is the Australian business name holder for AWS Mining and MyCoinDeal. The latter provides digital wallet services for cryptocurrency investments issued by AWS Mining.
The Securities Commissioner took emergency action against the AWS companies in November 2018, finding that they were illegally recruiting sales agents through LinkedIn, Facebook, and other online marketing channels.
AWS Mining claimed it was mining cryptocurrency in computing facilities in China, Russia, and Paraguay. According to the initial order, AWS claimed the contracts are “guaranteed to 200% return on purchase price."
The unlicensed sales agents, one of whom was in Midland, represented to investors that there was a “200% passive return on every investment.”
Although investors were told they would receive a 200% return on the purchase of the contacts, AWS Mining also disclaimed the guarantee. The company said investors would bear the risks of mining cryptocurrency, which include volatility in the price of cryptocurrencies, system or technical failures, and changes in the cost of electricity used to power and cool hardware.
According to the emergency action, AWS Mining used a multilevel marketing network of sales agents to sell the mining power contracts and paid as many as six different types of bonuses and commissions to these sales agents.
The AWS Mining order is the second in which a company offering cryptocurrency-related investments is sending money back to investors.
Under the terms of a Feb. 21 Order, Utah-based firms that illegally sold unregistered cryptocurrency-mining investments paid a $25,000 fine to the State of Texas and offered Texas residents full repayment of any money they invested.
Darren Olayan of Lehi, Utah, controls the two companies: NUI Social LLC and Mintage Mining LLC. The order also determined that two of the companies’ cryptocurrency-mining investment offerings are securities under Texas law.