NEBRASKA - State banking officials have issued a cease-and-desist order against a crypto-mining investment company after it took $725,000 from a Nebraska investor and her mother.
Satitech Mining and Machinery, an online company, would be barred from offering or selling securities in Nebraska until the securities are registered with the Nebraska Department of Banking and Finance. Company officials will also need to be registered as broker-dealers or broker-dealer agents under state law according to the order that took effect on November 10th.
Cryptocurrencies are a form of unregulated digital money that can be used to buy goods and services. They use encryption technology to make them secure. The currencies have been compared to arcade tokens or casino chips because people exchange real money for cryptocurrency.
One way to attain these cryptocurrencies other than purchasing them from a crypto wallet is by mining them. This method rewards people with cryptocurrency for solving extremely difficult mathematical problems which verify the peer-to-peer payment process. Mining is most often done by computer programs. Mining corporations, such as Satitech Mining and Machinery, have employed large pools of computers to do more work and receive more cryptocurrency as a result.
A new state law aimed at protecting elderly Nebraskans from financial exploitation alerted department officials to the situation.
Claire McHenry, deputy director of the department's securities bureau, said this case was the first that has led to a cease-and-desist order.
“I am very pleased that financial firms are already using the tools provided by the Nebraska Protection of Vulnerable Adults from Financial Exploitation Act,” she said. “This case is an example of how the financial industry and regulators are working together to protect investors.”
State banking officials cautioned investors about doing business online with financial companies with whom they are unfamiliar. In many cases, the investor is told to wire money or send a prepaid card, often to a location outside the United States.
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