October 19, 2020 – The Securities and Exchange Commission of the Philippines (SEC) has issued an advisory against Mining City for operating without the necessary license and authority to solicit investments from the public and to sell unregistered investment contracts.
In a press release that was sent to BitPinas, the SEC said that upon investigation, it has found that the public is being encouraged by numerous individuals to invest in Mining City, which is essentially a cryptocurrency mining contract platform. In this scheme, cryptocurrency is acquired by utilizing shared mining equipment located in a remote data center. The equipment is to be funded by those who avail of Mining City contracts.
SEC said an “investment contract” exists when money is invested or placed in a common enterprise with expectation of profits derived from the effort of others.
Investors could choose Bitcoin Vault (BTCV) plans between Primary BTCV Package ($300 or Php 16,500) to Platinum BTCV Package ($12,600 or Php 693,000). The SEC found out that persons promoting Mining City are promising investors that they could earn between $1.5 to $2 (Php 100) up to $69 to $92 (Php 5,000) daily for 1,100 days. There are also rewards for direct and indirect referrals.
The Commission also said that Mining City is claiming that no one, including any government, will be able to shut it down because it is decentralized and free from any authority.
Despite these claims, the SEC is of the opinion that Mining City’s “so-called smart contracts” have the nature of securities in the form of investment contracts. In the Philippines, anything deemed a “security” is subject to the jurisdiction of the Commission. However, the regulator found that Mining City is not registered and also operates without the necessary license and authority to solicit investments from the public and issue investment contracts.
Thus, any claim of decentralization does not change the fact that the SEC will enforce its rules if it deems that a project or company’s offering is a security.
“Mining City clearly shows indication of a possible Ponzi Scheme where monies from new investors are used in paying “fake profits” to prior investors and is designed mainly to favor its top recruiters and prior risk takers,” the SEC said in a statement.
Moreover, Mining City’s product ultimately deals with cryptocurrencies, which is a form of virtual currency, which is within the jurisdiction of the Bangko Sentral ng Pilipinas (BSP). The SEC said Mining City does not appear in the BSP’s list of virtual currency exchanges (VCEs).
The SEC concluded that Mining City, its recruiters, salesman, brokers, dealers, and agents are in violation of the country’s Securities Regulation Code (SRC) and other laws and has warned that the organization and the persons involved may incur criminal liability, may be sanctioned or penalized. The names of all those involved will also be reported to the Bureau of Internal Revenue (BIR).
The Commission advised the public to not invest or stop investing in any scheme offered by Mining City.
The SEC also remarked that the laws cited in the advisory are not aimed to hinder or pose significant risk to businesses and cryptocurrency projects but merely to protect both the registered entities and the public from any irregularities arising from unauthorized operations.
BitPinas strongly encourages all readers to heed the advice of the SEC in these matters.
This article is first published on BitPinas: PH SEC Issues Advisory Against Mining City, a Crypto Mining Contract Platform