SEC Freezes Assets of DEBT Box in $50 Million Crypto Fraud Case

The U.S. Securities and Exchange Commission (SEC) has obtained a temporary asset freeze, restraining order, and other emergency relief against Digital Licensing Inc., a Utah-based entity operating as “DEBT Box,” along with its four principals and 13 other defendants. The action is in connection with an alleged fraudulent scheme involving the sale of crypto asset securities, as announced in a press release dated July 28, 2023.

According to the SEC’s complaint, unsealed in the U.S. District Court for the District of Utah, the defendants have been engaged in an ongoing scheme since March 2021 to sell unregistered securities referred to as “node licenses.” Through various online videos, social media posts, and investor events, DEBT Box and its principals claimed that these licenses would generate crypto asset tokens via crypto mining activity, and that revenue-generating businesses in different sectors would drive the value of the tokens, resulting in significant gains for investors.

The SEC alleges that the “node licenses” were a sham, created by DEBT Box instantaneously using code on a blockchain, and that the company and its principals lied about virtually every material aspect of their unregistered offering. The complaint states, “We allege that DEBT Box and its principals lied to investors about virtually every material aspect of their unregistered offering of securities, including by falsely stating that they were engaged in crypto asset mining,” as per Tracy S. Combs, Director of the SEC’s Salt Lake Regional Office.

The fraudulent scheme reportedly raised approximately $50 million, along with unspecified amounts of Bitcoin and Ether. In total, 18 defendants have been charged with engaging in unregistered securities offerings, with additional charges for violations of the antifraud provisions of the federal securities laws against some of the defendants.

The Honorable Judge Robert J. Shelby, U.S. District Judge for the District of Utah, entered an order on July 28, 2023, imposing a temporary restraining order, asset freeze, and other relief. Josias N. Dewey of the law firm Holland & Knight LLP has been appointed as a temporary receiver over DEBT Box to marshal assets for the benefit of investors.

Investors who believe they were affected by the DEBT Box offering may seek further information at the receiver’s website or by calling a designated phone number.

The SEC’s action against DEBT Box highlights the regulatory body’s continued focus on ensuring compliance within the crypto asset space and protecting investors from fraudulent schemes. The investigation is ongoing, and the SEC has provided educational resources to help investors recognize the risks associated with crypto asset securities and unregistered offerings.

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Montana Passes Crypto Miner Rights Bill

Montana’s House of Representatives passed a landmark bill that seeks to enshrine the rights of crypto miners and prohibit local authorities from obstructing crypto mining operations. The bill, numbered 178, was passed during its third reading by a vote of 64 to 35 on April 12, and it will become law once Governor Greg Gianforte signs it.

The legislation establishes a “digital asset mining right” for crypto miners and forbids any discriminatory electricity rates charged to them. Additionally, it seeks to safeguard mining operations that take place “at home” and remove the authority of local governments to use zoning laws to impede crypto-mining activities. The bill also bars any extra taxes on using cryptocurrency as a means of payment, and it categorizes “digital assets,” including cryptocurrencies, stablecoins, and nonfungible tokens, as “personal property.“

The legislation’s main aim is to provide a clear framework for crypto miners to operate in Montana, removing any ambiguity and hindrances that local governments might impose. It also limits the power of local authorities by restricting them from imposing different requirements on mining centers compared to those on data centers. Additionally, authorities cannot prevent crypto mining in industrial areas and private homes. The revised version of the bill is much more concise, with section three significantly shortened from its previous length, which was nearly three full pages and included several articles unrelated to crypto mining.

The bill’s sponsor, state Senator Daniel Zolnikov, is a member of the Republican Party, as is Governor Gianforte. Therefore, it is unlikely that Gianforte will veto the bill. Upon signing, Montana will join the ranks of other states in the US, such as Wyoming and Texas, that have passed legislation to promote crypto mining.

The passing of this bill comes at a time when crypto mining is facing increased scrutiny from environmentalists and governments alike. Critics argue that the energy-intensive nature of crypto mining contributes to carbon emissions, which exacerbates climate change. However, supporters of crypto mining argue that it provides economic benefits and job opportunities in areas where traditional industries have declined.

The passing of this bill could boost Montana’s economy, especially in areas where traditional industries have struggled. It will provide clarity to crypto miners and could attract more businesses and investors to the state. Furthermore, the legislation could inspire other states to follow suit and develop a clear framework for crypto mining, ensuring that the US remains competitive in the global crypto market.

In early April, a similar bill protecting crypto miners from discriminatory regulations and taxes passed through the Arizona House of Representatives and Senate and now awaits Governor Doug Ducey’s decision. The passing of these bills highlights a growing trend in the US, where states are taking proactive steps to attract crypto businesses and investors, providing clarity and protection for this burgeoning industry.


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Venezuela Shuts Down Crypto Mining Operations

Venezuela, a country known for its volatile political climate, has recently made headlines for shutting down several crypto mining facilities throughout the country. According to reports from local media outlets and tweets from Venezuela’s National Association of Cryptocurrencies, mining operations were ceased in the states of Lara, Carabobo, and Bolívar in the past few days. Although it is unclear how many crypto firms were affected by the shutdown, several crypto exchanges were also ordered to cease their operations.

The closure of crypto mining facilities is believed to be part of an ongoing investigation into corruption involving Venezuela’s state-owned oil company, Petróleos de Venezuela S.A. (PDVSA), and the country’s national crypto department. The Venezuelan government has been grappling with the financial crisis and hyperinflation, leading many to turn to cryptocurrencies as a more stable investment option. However, the mining of cryptocurrencies requires a significant amount of energy, which is often subsidized by the government. As a result, the shutdown of crypto mining facilities could be seen as a way to conserve energy and resources amidst Venezuela’s financial struggles.

Additionally, the corruption investigation involving PDVSA and the national crypto department has been ongoing for several years. PDVSA has been accused of embezzlement and money laundering, with the country’s former oil minister, Rafael Ramirez, at the center of the investigation. The national crypto department, which was created in 2018 to oversee the country’s cryptocurrency operations, has also been under scrutiny for alleged corruption and mismanagement of funds.

The shutdown of crypto mining operations in Venezuela has raised concerns among crypto investors and traders, who are now questioning the government’s stance on cryptocurrencies. While some experts believe that the shutdown is simply a way to conserve energy and resources, others believe that it is part of a larger crackdown on cryptocurrencies in the country. The Venezuelan government has been known to take drastic measures to control the country’s economy, including imposing strict capital controls and devaluing the country’s currency.

In conclusion, the shutdown of crypto mining operations in Venezuela is just one of many challenges facing the country’s cryptocurrency industry. The ongoing corruption investigation involving PDVSA and the national crypto department, coupled with the country’s economic struggles, has created an uncertain future for cryptocurrencies in Venezuela. It remains to be seen how the government will navigate these challenges and what impact they will have on the country’s crypto industry.


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Core Scientific Faces Bankruptcy With Over 78% collapse in Share Value

Prominent Bitcoin (BTC) mining firm Core Scientific has revealed in a court filing that it is contemplating bankruptcy as a possible solution since it is unlikely to be unable to pay its debts shortly due to a lack of cash flow.


Consequently, the share price of the bitcoin miner drastically dropped in the hours after this disclosure.

Following the time of writing this report, the firm’s reserves had dropped from $1.01, where it stopped trading earlier this week to $0.22, a steep decline of more than 78%.

According to the Board’s decision, the company will not make payments due in late October and early November 2022 for a number of its assets and other financing transactions, together with its two bridge promissory notes. 

The court filing with the United States Securities and Exchange Commission (SEC) asserted that because of this outcome, the creditors under these debt facilities may exercise remedial measures following any applicable grace periods, such as choosing to speed up the principal amount of such debt, suing the Company for failing to pay, or looking to take action about collateral, where applicable.

Core Scientific Set to Declare Bankruptcy

Following the financial crisis, the company is evaluating available measures with the help of a few legal experts, as well as deploying strategic counsel, participating in liability management transactions, raising extra funds, or even changing its current capital structure.

Notably, the firm’s last option, specifically to protect itself from creditors’ litigation, is to declare bankruptcy if these alternative measures fail. Recall that this year, quite a number of enterprises have filed for bankruptcy in the cryptocurrency space as a result of the bear market. 

For instance, Thailand Security and Exchange Commission banned crypto-staking lender services after Zipmex filed for bankruptcy back in September. Additionally, major crypto lender Celsius filed for bankruptcy in July. 

Core Scientific found itself in this situation as a result of the market’s continued decline, among other factors that have driven down the estimated value of bitcoin and in addition to its legal actions against the insolvent Celsius Network

Before this, Core Scientific had already been producing a lot of BTC during the year. With nothing but a median price of about $23,000 per Bitcoin sold back in June, which resulted in the firm selling 7,202 units.

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Greenidge Generation Recruits New Executive Leaders, Forecasts Losses in Q3

Bitcoin mining company and zero carbon power plant supplier Greenidge Generation has announced a transition of leadership and a possible loss in Q3.


According to the press release, the CEO, Jeffrey Kirt resigned his position effective October 7 to hand over leadership to David Anderson as the new CEO and Director.

Scott MacKenzie was also appointed as the Chief Strategy Officer for the company, effective from 8th October 2022.

While Jeffrey Kirt has resigned from his position as the CEO of Greenidge, he will now act as a consultant to ensure that the company has a successful transition in this period.

While the financial records are still subject to scrutiny by the US GAAP to guide investors, the press release notes that Greenidge will be reporting approximately $29 million in revenue and a net loss within the range of approximately $22 million to $20 million for the three month period that ended in 30th September.

A total of 866 bitcoin at the hashrate of approximately 2.4 EH/s was produced with 24,500 miners as of the end of September.

Speaking on the transition of leadership, the former CEO and Director of Greenidge Jeffrey Kirt noted that the company has taken several giant strides to now be a “leading vertically integrated cryptocurrency datacenter and environmentally-sound power generation company”.

Having been instrumental in driving growth at various levels in the company as the CEO, he added that he was “pleased to pass the baton now to Dave and Scott, whose extensive experience in successfully running and improving commodities businesses, executing capital projects, and delivering reliable, low-cost power generation”, will now greatly benefit Greenidge.

Greenidge recently secured a filing with the U.S.Securities and Exchange Commission (SEC) to raise the sum of $22.8 million in partnership with B. Riley Securities and Northland Securities, both investment firms, in a class A common stock proposal.

This comes shortly after the company reported a loss of $107 million in Q2. Making the firm halt its expansion plans to focus on its South Carolina and New York sites as announced earlier in the year.

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Latvian National Extradited to the U.S for Crypto and Wire Fraud

Ivars Auzins, a Latvian citizen, accused of committing securities and wire fraud using eight companies that were alleged to mine or invest in crypto assets, was extradited to the United States to face a six-count indictment charge.


Breon Peace, the United States Attorney for the Eastern District of New York, pointed out:

“Auzins perpetrated a brazen scheme in which he fleeced investors who funneled millions of dollars into fraudulent cryptocurrency.”

He added:

“This office will continue to vigorously investigate and prosecute those who lie and steal from investors, including those like the defendant who operate from abroad.” 

The indictment noted that Auzins concealed his identity through aliases. As a result, he operated “Auzins Entities,” which advertised crypto mining and investments through websites, social media, and email campaigns. Per the announcement:

“Some of the Auzins Entities – Denaro and Bitroad Limited – purported to raise funds from investors through initial coin offerings (ICOs).  Other Auzins Entities purported to be cryptocurrency investment platforms that provided investors with different investment plans and profit rates.”

The Auzins Entities were able to siphon more than $7 million in crypto assets from investors in the U.S. and other places. This happened between November 2017 and July 2019, and soon after, the Auzins Entities went underground. 


Meanwhile, a recent report by blockchain analytic firm Chainalysis pointed out that crypto scams had nosedived by 65% in 2022. 


The drop in scam revenue was linked to Bitcoin’s bearish momentum, which has seen the leading cryptocurrency decline by at least 70% from its all-time high (ATH) price of $69K recorded in November last year. 


The Chainalysis report highlighted that people falling for crypto scams had declined. 

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Core Scientific Offloads 7,202 BTC Worth $167m in June

American Nasdaq-listed cryptocurrency mining firm Core Scientific has shared its operational update by selling over 7200 Bitcoins in June. (92).jpg

As announced by the firm, it sold as much as 7,202 Bitcoin units worth approximately $167 million at an average price of $23,000 during the month.

According to the firm, the sales of the Bitcoin units were used primarily for payments for ASIC servers, capital investments in additional data centre capacity, and scheduled repayment of debt. This trend is becoming more prominent amongst blockchain mining firms as many are resorting to selling their produced digital currencies in the wake of the ongoing onslaught in the prices of cryptocurrencies thus far this year.

From the updates shared, Core Scientific now has 1,959 bitcoins and approximately $132 million in cash on its balance sheet as of June 30. The company said its mining operations are growing as it produced 1,106 bitcoins in June, 36.9 bitcoins per day on average.

The company operates as many as 180,000 ASIC mining units, representing 17.9 EH/s, in its data centres. Of these miners, the firm has 103,000 while the rest were deployed on behalf of its clients.

The harsh economic terrain is affecting several offshoots of the digital currency ecosystem, including mining firms. While Core Scientific said it will continue to sell its BTC holdings in order to settle its operational and debt obligations, not all outfits have enough reserve to sell their coins without running at a loss.

There have been insinuations in the digital currency ecosystem that miners are bound to get bailout funds from FTX Derivatives Exchange CEO Sam Bankman-Fried. However, as reported by Blockchain.News, the vocal CEO has debunked the rumours, noting that while the trading platform is open to discussing with all companies, he said there is no specific plan to make investments in the mining industries as it does not align with the company’s core strategy.

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Luna Trading Draws Online Discussions in China Despite Crypto Ban

As the ever-evolving cryptocurrency is gaining global attraction the value of some of the world’s most prevailing digital currencies and non-fungible tokens (NFTs) has increased the curiosity of Chinese locals, even though virtual asset trading is banned in the country. - 2022-05-17T180731.244.jpg


Thus, the country has witnessed an increase of over 80% in the luna cryptocurrency on Tuesday, as it became the top searched term on the Chinese social media website called Weibo on Wednesday. Additionally, Bitcoin’s price dropped to half of its worth as of November 2021, also among the most trending search on the platform on the same day.


Thus, the significant interest shown by the Chinese internet user regarding cryptocurrencies topics is the proof of the crypto enthusiasts community that still exists in the country, despite the government crackdown against the cryptocurrencies and virtual asset service providers. Meanwhile, China was among one of the most popular countries in the world for having the world’s majority of bitcoin trading and mining volumes before the government and financial watchdogs started to ban the cryptocurrencies to halt the potential financial fights.


However, the prices of the top trending digital currencies have also slipped over time as the investors have sold the riskier cryptocurrencies and digital assets that include technology stocks, as the initiatives are taken by the federal reserve to enhance the interest rates to take under control the financial inflation.


Additionally, the world’s most prominent NFTs collections, including Bored Ape Yacht Club (BAYC), have also experienced depreciation in their value as the market dangled. According to data from Price Floor and DappRadar, the average sales of the BAYC fell by 29% over the last seven days in terms of US dollars, while the number of transactions and users decreased by 21% and 27% respectively. In addition to this, Cryptopunks and Moonbirds, are among also popular NFT projects that also experienced a decline in their worth- dropping more than 20% in their value.


On Weibo, the hashtag “Luna” nearly gained 8 million views on Wednesday, as the Chinese online users commented, “witnessing history”. Thus, despite being ban imposed from cryptocurrency trading and mining, many users in China are known to breach the restrictions.


Moreover, according to data from SimilarWeb OKX is one of the world’s largest digital crypto exchanges by trading value, 9.61% of its traffic generates from China. Before the ban was being imposed, china was the second-biggest contributor to this platform, trailing Russia with 12.18% of desktop traffic. On Huobi, which is another popular cryptocurrency exchange, revealed that only Contributes around 5% of the desktop traffic.

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Bitfarms Records $40m in Total Revenue and 900 BTC Mined in Q1 2022

Bitfarms Ltd, a Canadian Bitcoin mining company, announced its financial results for the first quarter ended March 31, 2022. Bitfarms said on Monday that it has mined 961 Bitcoin (BTC) at an average cost of production of $8,700/BTC during Q1 2022.

The Toronto-based Bitfarms admitted that financial results in Q1 2022 were significantly impacted by the decline in the market price of Bitcoin during the quarter as compared to Q4 2021.

The firm said it increased total revenues to $40 million in Q1 2022, up 40%, from $28 million in Q1 2021, but a decrease from $60 million in Q4 2021.

Geoff Morphy, Bitfarms’ President and chief operating officer, talked about the development and said: “We delivered another profitable quarter in Q1 2022, even with the decline in BTC price, and revenues were up 42% compared to Q1 2021. We have grown faster than the BTC network, as our hashrate at quarter-end was 2.7 Exahash per second (EH/s), up 22% from December 31, 2021. As of today, our hashrate is 3.4 EH/s, representing about 1.5% market share.”

Bitfarms mentioned that it continued its global expansion in Q1 2022, as it started mining production facilities at The Bunker and Leger in the City of Sherbrooke, Quebec, as well as in Villarrica Paraguay. The firm further disclosed that it also acquired a new Sherbrooke location, which it refers to as ‘Garlock’ that will eventually replace its de la Pointe mining facility.

With 137 megawatts (MW) of productive capacity in place and 229 MW planned to be operational this year, the company is moving forward with increases in its hashrate. Bitfarms said that it expects to exceed 4.0 EH/s by June 30.

With the dip in Bitcoin, Bitfarms seized the opportunity to transfer cash into early this year BTC. In January, Bitfarms purchased $43.2 million in Bitcoin as the cryptocurrency plunged about 12% during the first week of the year. The firm became the latest publicly-traded company to double down on the nascent crypto market despite some experts warning that the crypto volatility makes it an unreliable investment.

In January, Bitfarms bought 1,000 Bitcoins, a move that boosted its holdings to more than 4,300 coins worth about $175 million. Comparing that, Bitfarms posted about $121 million in revenue during the 12 months ending in September last year.

Bitfarms’ investment came less than a week after MicroStrategy bought almost 2,000 Bitcoins for $94 million at the beginning of December, as prices similarly struggled to recoup losses following its November all-time high of around $69,000 per coin.

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Nvidia Agrees to Pay $5.5 Million to SEC Fine for Failure to Crypto Mining Disclosures

Nvidia Corporation, a pioneer provider of graphics processors and related software, has agreed to pay a $5.5 million fine to settle the United States Securities and Exchange Commission (SEC) over allegations that the company failed to adequately disclose revenue from cryptocurrency mining. The Commission made the announcement on Friday.

According to the SEC, during two consecutive quarters in 2018, Nvidia did not make it clear that demand from crypto miners was responsible for a significant part of the rise in sales of its gaming graphics processing units (GPUs).

Nvidia’s powerful processors designed for handling video-game graphics are considered well-suitable for handling mining cryptocurrencies such as Bitcoin and Ethereum. Nvidia, the leading chipmaker in the US, agreed to the penalty without admitting or denying the regulator’s findings.

The SEC stated that Nvidia omitted the information about rising demand from crypto miners while making statements about how cryptocurrencies were affecting other business lines.

In a statement, Kristina Littman, head of the SEC’s crypto enforcement team, said: “All issuers, including those that pursue opportunities involving emerging technology, must ensure that their disclosures are timely, complete, and accurate.”

The charges claim that Nvidia misled investors by reporting a boost in revenue associated with gaming activities but hide to reveal how much of such success was contributed by the volatile crypto market.

Based on Nvidia’s financial reports for the 2018 fiscal year, the SEC noted that Nvidia witnessed a massive increase in crypto mining-related sales in 2017, at a time when the rewards for mining Ethereum rose significantly.

Crypto mining was identified as the reason behind the scarcity of gaming GPUs in recent times. As a result, Nvidia launched a separate Cryptocurrency Mining Processor (CMP) line for mining in order to prevent shortages of the gaming GPUs.

However, many of Nvidia’s gaming GPUs were still being sold to miners as there was a significant rise in demand for such products from miners.

The commission stated that Nvidia didn’t mention mining-related sales as a factor in the success of its gaming division. The regulator said that Nvidia mentioned cryptocurrency as an important factor in other markets. This suggested to the SEC that Nvidia was being deceptive deliberately.

Considering crypto’s boom-and-bust nature, this implied that Nvidia’s sales figures didn’t indicate reliable growth for the future, making investing riskier.

“NVIDIA’s analysts and investors were interested in understanding the extent to which the company’s Gaming revenue was impacted by crypto mining and routinely asked senior management about the extent to which increases in gaming revenue during this time frame were driven by crypto mining,” the SEC stated.

Investor anxiety became real as a crypto crash in late 2018 compelled Nvidia to slash its quarterly revenues projections by a whopping $500 million and prompted a shareholder lawsuit.


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Bitcoin (BTC) $ 26,606.13 0.57%
Ethereum (ETH) $ 1,593.83 0.87%
Litecoin (LTC) $ 64.89 1.80%
Bitcoin Cash (BCH) $ 208.81 0.63%