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State Action Targets Promoters of Crypto-Mining Investments

Texas Securities Commissioner Travis J. Iles took emergency action July 11 to stop a network of companies from fraudulently offering cryptocurrency-related investments to Texas residents.

The companies named in the Emergency Cease and Desist Order are controlled by Darren Olayan of Lehi, Utah, and are based in Utah. They are:

  • Mintage Mining LLC, which is illegally and fraudulently issuing and offering two different investments in the mining of cryptocurrencies;
  • Symatri LLC, which issued a new cryptocurrency called Kala and, with Mintage Mining, is offering investors the opportunity to own and possess pre-configured computer hardware to mine Kala;
  • NUI Social, a multi-level marketing company that purports to have more than 300,000 members in 140 countries. NUI recruits individuals for the cryptocurrency investments, with some of its “members” eligible to earn commissions for the people they recruit.

The order also names Wyatt McCullough, who maintains an addresses in Houston — at an office park at 5829 West Sam Houston Parkway—and is affiliated with NUI Social.

McCullough and a third individual named in the order, William Douglas Whetsell, are publishing advertisements targeting Texas residents.

The advertisements claim that Mintage can generate extraordinary returns—up to 250% annually—by successfully mining cryptocurrencies.

The order alleges widespread violations of the Texas Securities Act by all the entities and individuals.

The violations include making deceptive claims to the public. Olayan and Mintage Mining, for instance, are telling investors that Mintage is “in compliance” with securities laws, “works to always stay ahead of cryptocurrency regulation,” and “remain[s] so continually by keeping in contact with legal firms.”

Symatri is not disclosing material information about the value of its cryptocurrency Kala. Nor is it providing information about the risks of investments in the computer hardware used to mine Kala.

None of the persons offering any of the investments are registered to sell securities in Texas, nor are the investments themselves registered for sale or have qualified for an exemption from registration.


Crypto Info

Cryptocurrency Glossary

Bitcoin. A specific currency in an electronic payment system that acts as an alternative to fiat currency. It exists only on computers and the internet. It is not backed by a government, and its price is not set by a centralized authority.

Cryptocurrency. A digital currency secured through cryptography, or codes that can’t be read without a key.

Blockchain. A permanent online ledger that functions as a public accounting of cybercurrency transactions that have been executed. New “blocks” are added to the blockchain after the confirmation of each set of transactions.

Blockchain technology. Enables the electronic payment system for virtual currencies, but not tied to any specific currency. Companies are using blockchains to create a permanent record of transactions of such things as sales of investments, corporate records, and legal documents.

Initial Coin Offering. In an ICO, an entity issues virtual coins, often called tokens, to raise capital. A “token sale” is simply distributing a new cryptocurrency to investors,  who typically pay for the tokens in bitcoin or another established cryptocurrency.

Mining. The process of applying high amounts of computing power to solve complex equations that verify transactions in a virtual currency. Miners who solve the equations are awarded new units of the virtual currency.

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