SEC Warns in Investing ‘cloud mining contracts’
The Securities and Exchange Commission warned the public against a new cryptocurrency investment scheme called “cloud mining contracts.”
Cloud mining applies remote data centers to create complex calculations for mining cryptocurrencies such as bitcoin and ethereum.
In yesterday’s statement, the SEC said numerous local and foreign companies were enticing people to take part in this investment scheme. It promises daily or weekly profits in mining process.
To take part in the scheme, investors must first register online and pay an initial fee or investment either in legal tender or cryptocurrency, the SEC said. This constitutes an investment contract and should therefore be registered with the regulator.
Any cloud mining contract not registered with the SEC is therefore illegal and is punishable by fines or imprisonment, the SEC added.
The financial body also warned, that criminal accusations may be filed against people who invite or recruit others to join or invest in cloud mining contracts.
The SEC has issued multiple warnings against investing in cryptocurrencies, the most prominent of which was the KROPS initial coin offering (ICO) of Joseph Calata, owner of the delisted agribusiness Calata Corporation. The Calata ICO was also shut down by regulators in Hong Kong.
There are also numerous social media groups and other scams, such as PBB150 Trading, which SEC named as unregistered entities selling securities related to cryptocurrencies.
The BSP has already allowed the use of cryptocurrencies, but only for use in remittance activities. Currently, there are only two registered exchanges in remittance.
Both the SEC and BSP say they are not opposed to fintech innovations such as bitcoin, but they want to ensure the public fully understands such innovations before they get involved.