Philippines Securities and Exchange Commission (SEC) published a warning on their website to Cloud Mining services to not promote their business model without registering with SEC. Cloud Mining companies in the Philippines own a contract of pre-purchased hashpower from a remote mining company.
According to Bitcoin.com, the Cloud mining users in the Philippines buy the contracts for a limited amount of time from mining companies. Then the users will gain profit from the pool mining revenue if the agency is profitable and if not the contract breaks even or goes into losses. SEC says that several local and foreign cloud mining companies are encouraging the people of Philippines to buy these contracts.
These cloud mining companies will promise the people to pay daily or weekly of the mining profits also they do have an affiliate program and recruit new members for a commission.
The SEC said that Under Rule 26.3.5 par 4 of the 2015 Securities Regulation Code these sales are known as investment contracts. And this is kind of investment contacts are called by the Howey Test as securities. Since these include the sale of securities to the public, then the companies will require a proper license or permit to sell securities to the public.
The SEC warned that those people who act as those who act as salesmen, brokers, dealers or agents of these cloud mining companies or convincing people to invest without the necessary licenses will be prosecuted.
Offenders will be held criminally liable under Section 28 of the Securities Regulation Code and penalized with a maximum penalty of twenty-one (21) years of imprisonment or both pursuant to Section 73 of the SRC.
The SEC also tells the public that any activity without registration will be penalized by the Supreme court. Also to “stop investing” in cloud mining contacts and related types of investments.
In view thereof, the public is hereby advised to STOP INVESTING in these kinds of unregistered investment activity and to take the necessary precautions in dealing with these cloud mining companies.
Let us know in the comment below what do you think about the warning given by Philippines SEC to Cloud mining users?
