Cease and Desist: The Order Explained

The Texas State Securities Board has thrown down the gauntlet, issuing an emergency cease and desist order against AWS Mining PTY LTD, an Australia-based cloud mining company. Alarm bells rang on November 6, revealing that AWS Mining and its Chief Marketing Officer, Josiah Kostek, were allegedly luring unsuspecting Texas residents into buying unregistered securities. With promises of a “200 percent passive return on every investment,” this was enough to make any gold digger drool, but the reality seems far less golden.

Unregistered Securities: What’s the Big Deal?

So, what’s all the fuss about unregistered securities? Think of it this way: selling unregistered securities is like trying to sell ice cream in a beach town without a health permit. It’s not only illegal, but it can also melt your investment before you can say ‘vanilla swirl.’ Texas law requires companies like AWS to register their investment offerings and comply with regulations. Apparently, AWS thought their charm offensive could bypass these rules.

Multi-Level Marketing Magic or Mirror?

AWS Mining’s website advertised a multi-level marketing (MLM) scheme for just $20—a price point that has probably been proven to attract eager beavers looking to make some extra cash. Participants hoped to earn commissions by acting as sales agents, and while the theory sounds sparkling, the practice brought up a mutiny of concerns. The fine line between MLM and outright fraud can be thinner than Texas BBQ sauce on a brisket. Even more troubling is the claim that AWS did not honor their promises, convincing investors that all risks were theirs alone.

Cryptocurrency Wallet Woes

But wait, there’s more! To dive into AWS’s mining program, investors were coerced into securing a digital currency wallet from MyCoinDeal—a wallet that came with its own hidden fees. Meanwhile, the connection between AWS and MyCoinDeal was allegedly tucked away like a hidden jalapeño in a batch of queso, as they never disclosed that AWS was the business name holder.

Transparency? What Transparency?

AWS Mining seems to embody the ethos of ‘What happens in crypto, stays in crypto,’ as the defendants allegedly sidestepped disclosing crucial information. This includes their backgrounds in dealing with securities and cryptocurrencies, along with the commission structure for selling their mining power contracts. Without full disclosure, potential investors were left in the dark, which is not a great look in the world of investing—unless you’re managing a hedge fund, in which case, it’s practically a prerequisite.

Next Steps for AWS Mining

Now confronted with the law, AWS has 31 days to appeal the Securities Commissioner’s order. Should they fail to request a hearing, the order will be set in stone, marking the end of any hopeful mining adventure in Texas.

Previously, the Texas Security Board recognized the bold move against a network of cryptocurrency firms that also sold fake investment hopes to the state’s residents. It seems like the regulators have raised their game, and AWS is stepping into a ring they might not be ready for.