Secretary of State Jason Kander today halted Springfield resident Kenneth Slaughter’s Bitcoin-based investment scheme that used deceptive tactics to convince online investors to pay for the development of Bitcoin "mining" equipment. Mining is the process of solving complex math problems to gain additional Bitcoins, an unregulated digital currency.
"The fact that somebody is selling investments through Bitcoin rather than traditional currency doesn’t change their obligations to investors, and I encourage Missourians to call my office before making any Bitcoin investments," Kander said. "Investors have a right to know the full set of facts about both an investment and its backer, including the risks, profit-generating strategy and pertinent financial history."
Slaughter used an online forum known as "Bitcointalk" to solicit potential investors for his plans to develop, manufacture and sell Bitcoin mining equipment. Investment funds would go to Virtual Mining Corporation and Active Mining Corporation, two companies that Slaughter controlled as president and CEO.
In exchange for purchasing stock in Virtual Mining Corporation, investors could see a two-year return on their investment as high 2,812 percent, Slaughter stated on Bitcointalk. The offering brought in more than $200,000 in Bitcoins.
Peddling shares of Active Mining Corporation, Slaughter also told potential investors that his company had offices in London and that investors would receive "100% return" from the "global profits" of his technology sales.
Kander’s office asserts that in each offering Slaughter took no steps to inform investors of some of the potential risks involved with his venture, including the volatility of digital currency. Instead, Slaughter allegedly said that Bitcoin was "highly regulated" at both the state and federal level. In reality, as an investor alert from Kander’s office noted, Bitcoins are not issued by banks or the government, and various federal regulators are still assessing how to approach the digital currency.
Additionally, Slaughter should have advised investors of relevant complaints against Slaughter and his previous company, Active Internet Communications.
"I encourage Missourians to call my office at 1-800-721-7996 to check on the registration status of the person and product they are considering investing with," Kander said. "If somebody isn’t registered, that’s a major red flag."
Slaughter and his companies now face the prospect of multiple penalties from Kander’s office.
For more information, Missourians are encouraged to visit www.MissouriSafeSavings.com.
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