Cryptocurrency mining company Marathon Digital’s deal to set up new data center attracts US SEC scrutiny
The U.S. Securities and Exchange Commission (SEC) has asked cryptocurrency mining company Marathon Digital Holdings to produce documentation and contact information for one of its data mining centers in Hardin, Montana . The self-mining company, one of the largest in the US, has filed a detailed report of its financial activities with the SEC, also known as Form 10-Q, after receiving a subpoena related to investigation into possible violations of federal securities laws. Marathon Digital stated that the company is cooperating with the SEC investigation but did not go into detail regarding the subpoena.
In the third quarter of 2021, the SEC ordered Marathon Digital to produce documents and contact information for the Montana facility, where it arranges for development and storage Bitcoin miners in October 2020. This may involve 6 million shares of restricted common stock issued by Marathon Digital in regulated-exempt transactions. Those shares appear to be related to agreements related to the design and construction of the Montana-based facility.
Marathon Digital, meanwhile, is a self-mining company, which means their sole purpose is to mine Bitcoins with specialized hardware the company owns and make a profit by exchanging the coins already Mining for fiat. To increase its relevance, the company announced a expansion plan through a “Bitcoin acquisition or Bitcoin mining machine” next year. The money to finance the expansion – $500 million (approximately Rs 3,722) was raised through premium convertible bonds, a type of offering in which investors earn interest by providing a company with a source of cash.
Now, the SEC often considers blockchain companies that issue cryptocurrency, especially those that run initial coin offerings (ICOs) and offer investment contracts. Mining facilities, like Marathon Digital, usually don’t fall into this category. This case seems to be the first SECOND took action against a cryptocurrency mining company, as some crypto mining contracts may be subject to review by the SEC.
Investors are keeping a close eye on crypto companies due to the changing regulatory outlook under new SEC Chairman Gary Gensler. However, as mentioned, the agency has focused on stablecoins, altcoins and decentralized finance (DeFi) protocol on Ethereum and other networks.
According to a report by CoinTelegraph, Marathon Digital’s stock valuation fell immediately when news of the subpoena made headlines. Its share price fell about 17% on Monday to $63.07 (about Rs 4,691) on Nasdaq (MARA).
