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Class Action Suits Launched Against Cryptocurrency Mining Investment Company

MGT Lawsuit

The law offices of Pomerantz LLP in New York have filed a series of civil suits against MGT Capital Investment and its executive officers on behalf of several of the trading firm’s past or present customers. The suits allege that between October 9, 2015 and September 7, 2018, the company violated laws set forth by the Securities Exchange Act of 1934 that resulted in damages to several of its clients.

Between 2013 and April 2016, MGT described itself as “engaged in the business of acquiring, developing and monetizing social assets in the online and mobile gaming space, as well as the social casino industry.” In May 2016, however, the company revamped itself as a cybersecurity firm and developed bitcoin mining operations in both Washington state and Sweden. It was during this time that the company’s shares rose to some of their highest levels.

Stephen Schaeffer is the chief operating officer of MGT. Speaking with Bitcoin Magazine, he said that he believes any monetary losses suffered by clients are relative to the bearish conditions being witnessed in today’s crypto market.

“The bitcoin mining market has been tough,” he commented. “There’s no sugarcoating that. Our share prices exploded with the price of bitcoin, just as the difficulty rate for miners drastically increased. As bitcoin dropped, so did the value of our shares, but for miners, things got even worse because the difficulty rate stayed quite high. That means we’ve been spending considerably more in energy costs than we were last year.”

He continued, “I believe we hear too much redirect from miners on how great mining is and has been. Well, that’s true for a longer time frame. I have personally been mining since 2012 with an average monthly profit of about 15 percent. This, however, is not true in 2018. Profitability has been very marginal, and, for those not paying the absolute lowest prices for power and running lean operations, it has resulted in losses or even the closing of operations for some.”

Schaeffer contends that the company has taken steps to address some of these financial issues. MGT is currently working to move its miners from its Swedish facility, where costs have been too high and unpredictable, to the U.S. The company is negotiating with a number of locations in the country’s central northern region and anticipates relocating its mining operations back onto American soil very soon.

But the plaintiffs tell a different story. In 2015, Barry Honig, a leading small cap investor, and several of his associates purchased shares in MGT and obtained control over its management team. The suits claim that Honig forced the company into a “misleading stock promotion” that sought to drive up the prices and respective trading volumes of the company’s stock holdings. Honig is accused of later dumping his own shares for a serious profit while taking “numerous steps” to conceal his team’s involvement.

Lawyers representing the plaintiffs also say that Honig repeatedly made false and misleading claims regarding MGT’s operations and compliance policies, and that customers were never informed of the illegal pump-and-dump scheme. In addition, they say the defendants have a long history of engaging in illegal conduct relating to the sale and purchase of securities, and that they exercised inappropriate control over the company and placed MGT in danger of being delisted from the New York Stock Exchange.

While Shaeffer says he cannot comment on ongoing litigation, he did state, “Mr. Honig has no role within MGT other than being an early investor years ago. In fact, MGT was sued by Mr. Honig in a claim that was dropped with prejudice. I joined the company as an employee after Mr. Honig was no longer an investor. Mr. Honig has never had the authority to speak for the company and he’s had no input into the company.”

In September 2016, MGT announced that it had received a subpoena from the U.S. Securities and Exchange Commission (SEC) demanding “certain information” from the company. The commission filed a complaint against MGT two years later and subsequently published a report stating that executives were involved in the illegal pump-and-dump system. As a result, shares in the company fell to less than 40 cents each, roughly 91 percent less than where they had been during the company’s peak period.

“We made public the SEC subpoena in an effort to be fully transparent to our shareholders,” Schaeffer said. “The nature and intent of the document was a request for information regarding a group of specific accredited investors who had invested in the public company prior to 2016. There were no specific claims or allegations made at that time, just a request for information regarding communications between the company and these particular investors.”


This article originally appeared on Bitcoin Magazine.

 

Class Action Suits Launched Against Cryptocurrency Mining Investment Company

MGT Lawsuit

The law offices of Pomerantz LLP in New York have filed a series of civil suits against MGT Capital Investment and its executive officers on behalf of several of the trading firm’s past or present customers. The suits allege that between October 9, 2015 and September 7, 2018, the company violated laws set forth by the Securities Exchange Act of 1934 that resulted in damages to several of its clients.

Between 2013 and April 2016, MGT described itself as “engaged in the business of acquiring, developing and monetizing social assets in the online and mobile gaming space, as well as the social casino industry.” In May 2016, however, the company revamped itself as a cybersecurity firm and developed bitcoin mining operations in both Washington state and Sweden. It was during this time that the company’s shares rose to some of their highest levels.

Stephen Schaeffer is the chief operating officer of MGT. Speaking with Bitcoin Magazine, he said that he believes any monetary losses suffered by clients are relative to the bearish conditions being witnessed in today’s crypto market.

“The bitcoin mining market has been tough,” he commented. “There’s no sugarcoating that. Our share prices exploded with the price of bitcoin, just as the difficulty rate for miners drastically increased. As bitcoin dropped, so did the value of our shares, but for miners, things got even worse because the difficulty rate stayed quite high. That means we’ve been spending considerably more in energy costs than we were last year.”

He continued, “I believe we hear too much redirect from miners on how great mining is and has been. Well, that’s true for a longer time frame. I have personally been mining since 2012 with an average monthly profit of about 15 percent. This, however, is not true in 2018. Profitability has been very marginal, and, for those not paying the absolute lowest prices for power and running lean operations, it has resulted in losses or even the closing of operations for some.”

Schaeffer contends that the company has taken steps to address some of these financial issues. MGT is currently working to move its miners from its Swedish facility, where costs have been too high and unpredictable, to the U.S. The company is negotiating with a number of locations in the country’s central northern region and anticipates relocating its mining operations back onto American soil very soon.

But the plaintiffs tell a different story. In 2015, Barry Honig, a leading small cap investor, and several of his associates purchased shares in MGT and obtained control over its management team. The suits claim that Honig forced the company into a “misleading stock promotion” that sought to drive up the prices and respective trading volumes of the company’s stock holdings. Honig is accused of later dumping his own shares for a serious profit while taking “numerous steps” to conceal his team’s involvement.

Lawyers representing the plaintiffs also say that Honig repeatedly made false and misleading claims regarding MGT’s operations and compliance policies, and that customers were never informed of the illegal pump-and-dump scheme. In addition, they say the defendants have a long history of engaging in illegal conduct relating to the sale and purchase of securities, and that they exercised inappropriate control over the company and placed MGT in danger of being delisted from the New York Stock Exchange.

While Shaeffer says he cannot comment on ongoing litigation, he did state, “Mr. Honig has no role within MGT other than being an early investor years ago. In fact, MGT was sued by Mr. Honig in a claim that was dropped with prejudice. I joined the company as an employee after Mr. Honig was no longer an investor. Mr. Honig has never had the authority to speak for the company and he’s had no input into the company.”

In September 2016, MGT announced that it had received a subpoena from the U.S. Securities and Exchange Commission (SEC) demanding “certain information” from the company. The commission filed a complaint against MGT two years later and subsequently published a report stating that executives were involved in the illegal pump-and-dump system. As a result, shares in the company fell to less than 40 cents each, roughly 91 percent less than where they had been during the company’s peak period.

“We made public the SEC subpoena in an effort to be fully transparent to our shareholders,” Schaeffer said. “The nature and intent of the document was a request for information regarding a group of specific accredited investors who had invested in the public company prior to 2016. There were no specific claims or allegations made at that time, just a request for information regarding communications between the company and these particular investors.”


This article originally appeared on Bitcoin Magazine.

 

Canadian Blockchain Company Sees Opportunity in Newly Legalized Cannabis

DMG Cannabis

Like Walmart with pork from China and Maersk with shipping containers, DMG Blockchain Solutions (DMG) is hoping to be the first global supply chain company to manage cannabis products on the blockchain, initially in Canada — and then around the world.

Canada’s legalization of cannabis came into effect today on October 17, 2018, and Vancouver-based DMG Blockchain Solutions is poised to launch its platform built on the Hyperledger permissioned blockchain to provide what it calls “legal and safe” marijuana.

DMG Blockchain Solutions CEO Dan Reitzik told Bitcoin Magazine in an interview:

“The legal cannabis industry is brand new and, as such, producers, distributors, retailers and regulators are waiting for a solution and don't have years of experience with existing technology.”

In an effort to ensure that individual information and privacy will be protected, DMG is using the Hyperledger permissioned blockchain in conjunction with its own proprietary technology.

“This is one of the reasons we have partnered with a globally known, respected and trusted technology partner, as they have the experience integrating platforms with existing systems and software,” said Reitzik.

Medical marijuana has been legal in Canada for medical purposes since 2011, and, to this end, existing cannabis regulation calls for tight licensing and compliance measures. As pot goes recreational in the country, DMG’s solutions will leverage blockchain technology to enforce and streamline these processes.

This mainly involves verifying and tracking products — anything from cannabis, including edibles, oils and other derivatives — using a combination of the blockchain’s immutable distributed ledger and monitoring hardware. Keeping tabs on the flow of products with more certainty than existing systems will make it easier for companies to demonstrate that they’re falling in line with regulatory mandates, as federal departments responsible for regulating and taxing cannabis will have access to the DMG platform.

“[Companies] have been approved by the Canadian Government to cultivate and sell product, and our intention is to have ALL industry participants on this blockchain … [the government] will want assurances that product is from legal sources (elimination of black market) and that the products are safe for consumers. This is why all stakeholders will want to participate on our blockchain — to access these markets,” Reitzik said.

Canada: Fertile Market for Growing Cannabis Demand

According to DMG, cannabis represents a $23 billion industry in Canada alone. Some reports estimate that the global cannabis market could exceed $500 billion.

“Canada is being positioned to be the global supplier of cannabis, and our blockchain platform can help enable this by way of product traceability for rapid recalls, ensuring a legal source of product, and enhancing product safety, as well as facilitating and automating legal and taxation compliance,” DMG noted in a public statement.

“Canada has set up a network of more than 100 Licensed Producers (LPs), some of which have market caps in excess of $5 billion,” claimed Reitzik.

DMG is currently in discussions with cannabis industry players, including major licensed producers, quality assurance labs, retail distributors and government regulators.

The Blockchain Prescription

DMG’s goal is to have a global platform that will provide immediate product traceability, as well as the ability to automate transactions and information flow among licensed producers, licensed distributors, regulators, retailers, shippers, and reporting and auditing systems.

To DMG, there are many clearcut benefits to using a permissioned blockchain to manage cannabis logistics.

It can integrate the licensed accreditation of producers, distributors, retailers, shippers, as well as manage reporting and auditing systems. For an industry that is still federally illegal in the neighboring U.S., such rigid control mechanisms are essential to keeping product flow within regulatory confines and preventing it from illegally jumping across the border.

Within the supply chain itself, smart contracts will detect events such as defective products and product recalls, which will allow distributors and retailers to react to issues in real time.

For all other operations, interfaces are being developed between the blockchain and traditional systems to facilitate faster and more efficient information flow. The same systems will ensure that employee and client onboarding is frictionless and fast and that cooperation between industry entities is painless and efficient.

“This global blockchain initiative is a collaboration among industry stakeholders and is being tailored to meet industry players’ specific requirements. DMG intends to onboard significant industry participants as it launches its cannabis supply chain solution,” said Reitzik.

“This project is not simply DMG building a platform, it is a collaboration between many industry participants. Just as there's one global blockchain that manages bitcoin globally, we intend for this to be the single blockchain to manage the entire supply chain for cannabis globally,” added Reitzik.


This article originally appeared on Bitcoin Magazine.

 

Canadian Blockchain Company Sees Opportunity in Newly Legalized Cannabis

DMG Cannabis

Like Walmart with pork from China and Maersk with shipping containers, DMG Blockchain Solutions (DMG) is hoping to be the first global supply chain company to manage cannabis products on the blockchain, initially in Canada — and then around the world.

Canada’s legalization of cannabis came into effect today on October 17, 2018, and Vancouver-based DMG Blockchain Solutions is poised to launch its platform built on the Hyperledger permissioned blockchain to provide what it calls “legal and safe” marijuana.

DMG Blockchain Solutions CEO Dan Reitzik told Bitcoin Magazine in an interview:

“The legal cannabis industry is brand new and, as such, producers, distributors, retailers and regulators are waiting for a solution and don't have years of experience with existing technology.”

In an effort to ensure that individual information and privacy will be protected, DMG is using the Hyperledger permissioned blockchain in conjunction with its own proprietary technology.

“This is one of the reasons we have partnered with a globally known, respected and trusted technology partner, as they have the experience integrating platforms with existing systems and software,” said Reitzik.

Medical marijuana has been legal in Canada for medical purposes since 2011, and, to this end, existing cannabis regulation calls for tight licensing and compliance measures. As pot goes recreational in the country, DMG’s solutions will leverage blockchain technology to enforce and streamline these processes.

This mainly involves verifying and tracking products — anything from cannabis, including edibles, oils and other derivatives — using a combination of the blockchain’s immutable distributed ledger and monitoring hardware. Keeping tabs on the flow of products with more certainty than existing systems will make it easier for companies to demonstrate that they’re falling in line with regulatory mandates, as federal departments responsible for regulating and taxing cannabis will have access to the DMG platform.

“[Companies] have been approved by the Canadian Government to cultivate and sell product, and our intention is to have ALL industry participants on this blockchain … [the government] will want assurances that product is from legal sources (elimination of black market) and that the products are safe for consumers. This is why all stakeholders will want to participate on our blockchain — to access these markets,” Reitzik said.

Canada: Fertile Market for Growing Cannabis Demand

According to DMG, cannabis represents a $23 billion industry in Canada alone. Some reports estimate that the global cannabis market could exceed $500 billion.

“Canada is being positioned to be the global supplier of cannabis, and our blockchain platform can help enable this by way of product traceability for rapid recalls, ensuring a legal source of product, and enhancing product safety, as well as facilitating and automating legal and taxation compliance,” DMG noted in a public statement.

“Canada has set up a network of more than 100 Licensed Producers (LPs), some of which have market caps in excess of $5 billion,” claimed Reitzik.

DMG is currently in discussions with cannabis industry players, including major licensed producers, quality assurance labs, retail distributors and government regulators.

The Blockchain Prescription

DMG’s goal is to have a global platform that will provide immediate product traceability, as well as the ability to automate transactions and information flow among licensed producers, licensed distributors, regulators, retailers, shippers, and reporting and auditing systems.

To DMG, there are many clearcut benefits to using a permissioned blockchain to manage cannabis logistics.

It can integrate the licensed accreditation of producers, distributors, retailers, shippers, as well as manage reporting and auditing systems. For an industry that is still federally illegal in the neighboring U.S., such rigid control mechanisms are essential to keeping product flow within regulatory confines and preventing it from illegally jumping across the border.

Within the supply chain itself, smart contracts will detect events such as defective products and product recalls, which will allow distributors and retailers to react to issues in real time.

For all other operations, interfaces are being developed between the blockchain and traditional systems to facilitate faster and more efficient information flow. The same systems will ensure that employee and client onboarding is frictionless and fast and that cooperation between industry entities is painless and efficient.

“This global blockchain initiative is a collaboration among industry stakeholders and is being tailored to meet industry players’ specific requirements. DMG intends to onboard significant industry participants as it launches its cannabis supply chain solution,” said Reitzik.

“This project is not simply DMG building a platform, it is a collaboration between many industry participants. Just as there's one global blockchain that manages bitcoin globally, we intend for this to be the single blockchain to manage the entire supply chain for cannabis globally,” added Reitzik.


This article originally appeared on Bitcoin Magazine.