The Arkansas Cryptomining Association has filed a lawsuit against two state officials in Arkansas, claiming that they enforced an unconstitutional and discriminatory rule that prohibits foreign-born American citizens from participating in crypto-mining activities. The complaint was filed against Arkansas Attorney General Tim Griffin and Lawrence Bengal, the director of the Arkansas Oil and Gas Commission. The lawsuit was submitted to the US District Court Eastern District of Arkansas on March 13.
This legal action comes after a federal court ruling in November that temporarily prevented Arkansas from blocking a naturalized US citizen of Chinese descent from operating a crypto mining business. The specific state rules in question are known as “Rule K” and “Act 174,” which prohibit businesses controlled by foreign parties in Arkansas.
Connor L. Kempton, the Director of the Arkansas Cryptomining Association, argues that the vague language of Rule K and Act 174 gives the defendants the power to enforce these rules arbitrarily and discriminately, allowing them to grant or deny permits at their own discretion. Kempton asserts that the application of these rules is not only unconstitutional but can also be discriminatory based on race, alienage, and national origin.
Kempton points out that these rules were enforced against Jones Eagle LLC, a crypto mining firm operated by Qimin “Jimmy” Chen, a naturalized US citizen of Chinese origin. He specifically cites the Equal Protection Clause of the 14th Amendment of the US Constitution to support his claim that Rule K and Act 174 are illegal.
The Equal Protection Clause prohibits states from denying any person equal protection of the laws based on their race, alienage, or national origin. Kempton further argues that Rule K and Act 174 violate the due process rights of American citizens like Chen under the 14th Amendment.
Additionally, Kempton contends that the prohibitions and penalties imposed by Act 174 infringe on the federal government’s authority to investigate, review, and take action on foreign investments. He states that “Act 174 seeks to establish Arkansas’s own foreign policy, thereby intruding upon the federal government’s exclusive power to govern foreign affairs.”
In December, District Court Judge Kristine G. Baker issued an order barring Arkansas state officials from enforcing Act 174 against Jones Eagle until further notice.
This lawsuit raises important questions about the constitutionality and fairness of state rules that restrict foreign-born American citizens from engaging in crypto-mining activities. The outcome of this case could have significant implications for the crypto industry and the rights of individuals involved in this sector.
