Philippines Warns Against Cloud Mining Contracts, Threatens to Jail Unregistered Solicitors

April 17, 2018 11:46 UTC

The Philippines Securities and Exchange Commission has advised the public against social media offers to invest in cloud mining contracts and has warned unregistered solicitors they face imprisonment under Philippines law.

A government investigation has determined that certain parties offering such contracts define cloud mining as a process for acquiring cryptocurrency by using shared mining equipment based at a remote data center. The investors fund the purchase of the mining equipment.

Solicitors Require Payment

Numerous foreign and local companies solicit cloud mining companies in the Philippines and require investors to register an online account, then make a payment in either fiat or cryptocurrency for the mining contracts, the notice stated.

The companies promise to pay the investor daily or weekly from mining proceeds. They also offer commissions to investors for recruiting other investors who register.

A cloud mining contract, according to a court decision, is regulated by the country’s securities law since it involves a financial investment, the notice stated. It also falls under the securities law because the investment is a common enterprise involving pooled funds, and there is an expectation of profits.

The fact that the cloud mining company performs the profit-generating activities and distributes profits to investors also places the contract under the commission’s jurisdiction.

Also read: Philippines SEC confirms upcoming cryptocurrency, ICO regulations

Solicitors Must Register

Such entities are required to be registered and be licensed to sell securities to the public, the notice stated.

Parties representing these contracts on the Internet are subject to prosecution and can be held criminally liable. They can be sentenced to 21 years in prison. Those who recruit others to invest in such ventures can also be held criminally liable or accordingly sanctioned or penalized.

Featured image from Shutterstock.

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