Cryptocurrency Mining Firm Ordered to Return Investors Money
The Texas Securities Commissioner has ordered AWS Mining, a mining firm operating in the state, to repay their investors any money they had put into mining contracts. In Texas, the state securities regulators went on a statewide crackdown of illegitimate cryptocurrency businesses that were soliciting investors from Texas. AWS Mining is an Australian company that reached out to potential customers in Texas, alluring them ‘guaranteed returns of 200 percent’, as reported by Finance Feed, August 2, 2019.
There are mixed reactions from cryptocurrency investors when regulators take action or issue comments regarding the space. Sometimes you have a high ranking bureaucrat like Steve Mnuchin being openly ignorant to the benefits of crypto and the shortcomings of fiat currency; other times you have news like this that makes most people side with regulators.
AWS Mining successfully solicited 19 investors in the state of Texas and has agreed to an order whereby they must repay these 19 individuals their investment minus any profits the investors received. Historically, the Texas Securities Board has been quite anti-crypto, being one of the few states to sweep their entire jurisdiction to unearth any unlawful businesses.
The mining contracts claimed that the cryptocurrency was mined at facilities in China, Russia, and Paraguay, whilst also guaranteeing a 200 percent return on purchase price. Attaching the potential for returns as an irrelevant, randomly generated numbers is more than enough to attract ordinary people who are looking for ‘get rich quick’ schemes.
As Naval Ravikant says, all ‘get rich quick’ schemes are just someone else getting rich off you. The irrational perception of risk-reward in cryptocurrency is driving a new era of uninformed retail investors who believe they will become wealthy through a few easy investments.
Luck or Perception?
Not everyone can say they mined Bitcoin when it was free or that they bought Bitcoin when it was $.03.
The ones who did were incredibly perceptive to see the potential for a private economy and the need for censorship-resistant money that authorities cannot control. Although the role of luck for them to find this opportunity cannot be denied, there were more people that looked at Bitcoin and saw a failure or quirky experiment than people who looked at it and saw self-sovereign money.
The parabolic returns Bitcoin has given early investors has created a plague in the current market; everyone who enters thinks it’s easy money with no strings attached.