SEC Investigating Marathon Digital Over Potential Securities Law Violations

The U.S. SEC is investigating Marathon Digital Holdings for a potential federal securities law violation. The investigation pertains to a deal struck between Marathon and Beowulf Energy last year.

The United States Securities and Exchange Commission (SEC) has subpoenaed cryptocurrency mining company Marathon Digital holdings, according to a quarterly filing. The SEC is investigating Marathon for violating federal securities laws, according to the document.

The investigation is related to a partnership for a Montana data facility, which was an effort in collaboration with Beowulf Energy in October 2020. Marathon and Beowulf Energy first struck a deal last year, with the focus being on developing mining solutions with low-energy consumption. In exchange for relocating its bitcoin mining center to near a Beowulf energy station, the latter would receive stock from Marathon.

Marathon’s share price dropped by a whopping 27% following the news. Even so, prices are still up considerably from the start of the year, which indicates how well crypto companies have been doing this year.

The SEC is ramping up its scrutiny of the cryptocurrency market, with multiple subpoenas and lawsuits filed in the past 12 months. It is clear that it is now determined to bring order to the market, as other U.S. authorities begin reviewing regulation from their own perspectives.

Crypto companies on SEC radar

The subpoena issued to Marathon is just one of many actions that the SEC has taken up to curb the potentially unlawful activity. For many years, the SEC had sat on the sideline, simply observing the market. Some market enthusiasts were hoping for a more involved approach so that it would bring some legitimacy to the market.

It appears that time has now come, with a regulatory framework also likely in the months to come. SEC Chair Gary Gensler has hinted at this, suggesting a crypto regulation agenda during a Senate testimony. Republican senators, however, pushed back against the agenda, so it’s unclear if it has been changed since.

But while it investigates crypto companies, it is also approving futures-based bitcoin ETFs, which is a positive sign for the market. Bitcoin spot ETFs, however, are not getting through to the SEC, and it may take more time for these to arrive on the market.