USI-Tech To Shutdown Distribution, Marketing Operations Amidst Scam Allegations
Crypto investors beware: the government is starting to crack down on fraudulent Bitcoin schemes.
On January 6, USI-Tech issued a letter to its North American affiliates terminating all distribution agreements. The company also ceased all sales and marketing operations as a result.
USI-Tech blamed the move on its affiliates and did not address the allegations made by the Texas securities board.
“We were utterly dismayed to learn that a large number of our sales partners extensively advertise our services on their own websites as well as on social media in a manner which is a breach of contract as well as illegal,” the letter stated.
“Consequently, we have decided to immediately discontinue our business activities as well as our sales in the US and Canada.”
The decision comes as a result of USI-Tech’s failure to register its securities and provide evidence of its mining and investment operations with the State Securities Board.
Cease and Desist
Last December, The Texas State Securities Board issued an emergency cease and desist to USI-Tech and two promoters, Clifford Thomas and Michael Rivera, following an internal investigation and evidence of securities fraud.
USI-Tech bills itself as “the world’s first automated trading platform for the Bitcoin currency”, promising its customers daily growth and “[consistent] returns of up to 150% per year.”
But regulators targeted USI-Tech for its lack of transparency and deceptive advertising.
“Neither USI-Tech nor the sales agents, Clifford Thomas of Suitland Md., and Michael Rivera of Los Angeles, are registered to sell securities in Texas,” The Texas Securities Board stated in its December news post, “the investment also is not registered in Texas.”
USI-Tech attempted to defend itself by claiming that bitcoin investments are not subject to securities law, but a “certified legal product in the USA per the FTC.” The securities board denied this and argued that the board regulates mining investment registrations.
The board also claimed that USI-Tech has failed to disclose details regarding its operations. These violations included:
Information about the facilities used to mine bitcoins, the costs of mining bitcoins, and whether they have successfully mined bitcoins;
The terms of the contracts and an explanation of USI-Tech’s “non-exclusive interest” in mining contracts; and
Information about whether the company’s financial condition is strong enough to provide a 1% daily return.
Aftermath
Affiliates based in the U.S. and Canada have been blocked from their USI-Tech back offices.
USI-Tech claims that commissions up to January 6 will be paid out after a 2-week hold. The company will audit all sales received through unapproved or contract-breaching methods.
In addition, USI-Tech is advising all of its affiliates to destroy any evidence online promoting USI-Tech’s services. The move is widely seen as an attempt to remove evidence that may incriminate them in further investigations.
Just two months ago, USI-Tech launched its own ICO for Techcoin, rewarded for investments and referrals. This ICO was likely an exit strategy to accumulate money before announcing the shutdown.
Last week, the Texas State Securities Board also handed cryptocurrency lending and investment platform, Bitconnect, an emergency cease and desist letter.
Yet another one any of these "investment" type sites are all scams just use your best judgement seriously