Association seeks to overturn Arkansas law aimed at foreign crypto miners

The Arkansas Cryptomining Association is suing two Arkansas state officials, arguing that they enforced an unconstitutional and discriminatory state rule prohibiting foreign-born American citizens from engaging in crypto-mining activities, among other things.

The complaint was made against Arkansas Attorney General Tim Griffin and the director of the Arkansas Oil and Gas Commission, Lawrence Bengal, on March 13 in the US District Court Eastern District of Arkansas. 

It follows a federal court ruling last November that temporarily barred Arkansas from preventing a naturalized US citizen of Chinese descent from operating a crypto mining business.

The Arkansas state rules concerned are “Rule K” and “Act 174,” which prohibits foreign-party controlled businesses in the state.

Director Connor L. Kempton of the Arkansas Cryptomining Association said the vagueness of Rule K and Act 174 gives the defendants arbitrary and discriminatory enforcement powers, enabling them to grant or deny permits at their own discretion.

He said the application of Rule K and Act 174 is unconstitutional and can be discriminatory based on race, alienage and national origin, among other things.

Kempton noted that these rules were enforced against crypto mining firm Jones Eagle LLC, which is run by Qimin “Jimmy” Chen, a naturalized US citizen of Chinese origin.

Kempton specifically pointed to the Equal Protection Clause of the 14th Amendment of the US Constitution in arguing the illegality of Rule K and Act 174.

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The Equal Protection Clause similarly prohibits the US states from denying any person equal protection of the laws based on the person’s race, alienage or national origin. 

The crypto mining executive also argued that Rule K and Act 174 strip American citizens like Chen of due process rights under the 14th Amendment.

Kempton also said the prohibitions and penalties imposed under Act 174 infringe on the federal government’s authority to investigate, review and take action on foreign investments.

“Act 174 seeks to establish Arkansas’s own foreign policy, thereby intruding upon the federal government’s exclusive power to govern foreign affairs.”

District Court Judge Kristine G. Baker said on Dec. 9 that the Arkansas state officials were barred from enforcing Act 174 against Jones Eagle until further notice.

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