Website of The Texas State Securities Board, a Texas state agency with a mission to protect Texas investors. Source:
Website of The Texas State Securities Board, a Texas state agency with a mission to protect Texas investors. Source:

The Texas State Securities Board announced on July 12 that immediate action had been taken to halt the business of a network of companies, offering crypto related services and products. Counts of unregistered securities, violations of Texas Securities Act, and fraud all made the basis for the Cease and Desist order.

In an email to, Joseph Rotunda, Director of Enforcement at the Texas State Securities Board commented the action by saying:

“You’ve read previous orders that accused promoters of illegally selling investments in cryptocurrency mining programs […] promoters generally promised to host and manage computer hardware that mined cryptocurrencies, and typically promised to pay investors profits […] This case, however, involves a cryptocurrency mining investment where the issuer is selling computing hardware to investors. Instead of relying on the promoter to host the computing hardware, investors take possession of the hardware, plug it into a power outlet and mine Kala, a new cryptocurrency, from their home”.

He added.

“It’s a new twist on a new product in a new market.”

Findings and Facts

The Texas Regulator mentioned three established, Utah-based companies, two holding companies, and three individuals in the order. A crypto mining hardware vendor called Mintage Mining LLC, a cryptocurrency based reward platform for users known as Symatri LLC, and a specialized marketing firm called NUI Social are reportedly the pillars of the investment scheme.

Darren Olayan, William Douglas Whetsell and Wyatt McCullough control the companies, and were also targeted for “illegally and fraudulently offering investors […] investment in cryptocurrency mining, where investors own and possess pre-configured hardware that passively mines Kala.

Rotunda revealed to [blokt]:

“The case involves an initial coin offering of a new utility coin, an ecosystem, promises of listing on an exchange and a multilevel marketing company that may have over 300,000 members in more than 140 countries.”

In fact, Mintage Mining LLC describes itself as a “collaborative crypto mining platform that mines the most current coins on the most state-of-the-art hardware.” The company’s website offers inventors the possibility of signing up for different membership bundles. After setting up a membership account through NUI Social, which is the multi-level marketing partner of Mintage Mining, investors can purchase one of two offered investment programs: The Hash Rate Unit investment Program, or Open-Ended Unit investment Program.

Symatri LLC is reportedly built around an ecosystem which incorporates two platforms, one referred to as CORE and the other one as REACH. CORE allows members to earn “points” by participating in a variety of marketing activities that are allegedly simple, easy to perform.

Members can allegedly exchange “points” for Kala cryptocurrency, an ERC-20 token sold during an ICO held by Symatri from November 2017 to March 2018 that helped raise around $8.5 million for 814 million tokens sold, according to the Emergency order. Members can thereafter access the REACH platform, a marketplace that purportedly allows them to redeem their Kala for a variety of goods, like iPads, Go-Pros, fitbits, and gift cards.

In partnership with Symatri LLC, Mintage Mining is offering specialized Kala mining rigs pre-configured to passively mine Kala cryptocurrency, while entitling buyers to some of the earnings on their mining efforts. In fact, investors are not rewarded based on the performance of their rigs. Instead, the mined Kala will be “evenly split between investors” and distributed based on the total mining output, and their respective hash rate capacity.

Multiple Violations of Texas Securities Act

The violations accounted for by the Texas Regulator stem from the fact that both investment programs offered by Mintage Mining LLC, along with the Kala Rigs investment schemes, are all investment contracts, and defined as “securities” by both federal and state laws. The report underlines that such securities should have been cleared with the Securities Commissioner in Texas prior to any offering, not to violate the Section 7 and 12 of the Texas Securities act which relate to offerings of unregistered securities.

The named entities in the order are also targeted for engaging in fraud in connection with the offer for sale of securities and making offers containing misleading statements or otherwise likely to deceive the public, hence threatening immediate and irreparable public harm.

The named parties were ordered to immediately cease and desist from offering such securities in Texas, until they are registered with the securities commissioner, or obtain an exemption from registration from the same regulator.

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