Marathon Digital Holdings has been asked by the US Securities and Exchange Commission (SEC) to submit records and conversations for one of its data-mining centers in Hardin, Montana. After receiving a subpoena about an inquiry into suspected violations of federal securities law, the self-mining firm, which is among the largest in the US, presented a thorough report of financial performance to the SEC, commonly known as Form 10-Q. Marathon Digital claims to be working with the SEC’s inquiry but does not provide any other information on the subpoena.
The SEC had asked Marathon Digital to deliver papers and communications for the Montana facility, which is planned to create and store with Bitcoin miners in October 2020, in the third quarter of 2021. This might be in regard to Marathon Digital’s 6 million shares of restricted common stock issued in non-regulatory transactions. Those shares appear to be linked to contracts for the design and building of the Montana plant.
Marathon Digital, on the other hand, is a self-mining corporation, which means its main aim is to mine Bitcoin using specialized gear it owns and profit from the exchange of the generated coins for cash. To increase its relevance, the firm has launched a year-long expansion strategy that would include “the acquisition of Bitcoin or Bitcoin mining rigs.” Senior convertible notes, a form of issuance in which investors receive interest by supplying a firm with financial resources, were used to generate the $500 million (approximately Rs. 3,722 crores) needed to support the expansion.
Currently, the SEC investigates blockchain firms that issue cryptocurrencies, particularly those that conduct initial coin offerings (ICOs) and provide investment contracts. Mining operations, such as Marathon Digital, are not often included in this category. Because some cryptocurrency mining contracts are under the SEC’s jurisdiction, this appears to be the first time the SEC has taken action against a cryptocurrency mining firm.
In light of incoming SEC Chair Gary Gensler’s evolving regulatory stance, investors are keeping a careful eye on cryptocurrency businesses. However, the agency has focused on stablecoins, altcoins, and decentralized finance (DeFi) protocols on Ethereum and other networks, as previously stated.
According to CoinTelegraph, Marathon Digital’s stock value plummeted as word of the subpoena made the rounds in the media. On Nasdaq, the stock dropped nearly 17% to $63.07 (approximately Rs. 4,691) on Monday (MARA).