Canadian Regulator Rules Crypto Mining Contracts Can Be Classified As Securities
Canadian regulator Financial Markets Authority of Quebec (AMF) says cryptocurrency mining contracts can fall under securities regulation. The announcement comes in response to a request that the investors of a cryptocurrency mining firm contact the AMF regarding $300,000 of unrecovered investments.
Technologies Crypto Inc. reportedly took $300,000 from investors, who presumed their investments would be used for mining. Many investors have not been able to successfully contact the firm.
According to Jean-François Fortin of the AMF,
“With this decision, the [Financial Administrative Tribunal] TMF ruled for the first time that an investment offer related to cryptocurrency mining may constitute an investment contract, i.e. a security whose public offering is regulated… We therefore invite investors who have done business with the respondents to contact the authority promptly so that we can assist them.”
Cryptocurrency mining is a process used to validate transactions on blockchain networks. Mining reduces risks of manipulation of transactions on blockchain networks.
AMF, which is investigating the matter, urges investors to make contact.
“The authority is currently investigating this matter. It, therefore, urges anyone who has invested money with the correspondents to contact David Fortin-Dominguez and Samory Proulx-Oloko, to contact Ms. Hélène Guilbault at 1 877 525-0337, extension 2427, no later than February 28, 2019.”
In February, AMF asked the Financial Administrative Tribunal (TMF) to issue a series of freezing orders against Technologies Crypto Inc. Consequently, the organization has to release custody of its cryptocurrency mining equipment and cease crypto activities related to the trade of securities.
“TMF also ordered the respondents not to dispose, directly or indirectly, of any apparatus, equipment or machinery used to mine cryptocurrencies that they have in their possession and to preserve them.”
AMF and TMF continue to exercise legal powers over cryptocurrency organizations. Earlier in 2018, the regulator recently renewed injunction orders against companies and individuals connected with the alleged ICO-fraud Plexcoin. In that case, TMF ruled that plexcoins are investment contracts.