The Texas Securities Board see USI-Tech as a “bitcoin promoter” offering an investment opportunity.

Following an internal investigation into USI-Tech and two US promoters, the board presented gathered evidence of securities fraud to the Securities Commissioner.

In an attempt to stop promotion of the USI-Tech Ponzi scheme throughout Texas, the Securities Commissioner issued an emergency cease and desist on December 20th.

The emergency cease and desist targets two US USI-Tech promoters, Clifford Thomas and Michael Rivera (right).

In addition to USI-Tech, Rivera is also promoting the BitConnect Ponzi scheme.

According to the Texas Securities Board, USI-Tech is

an overseas firm that is promising low-risk, triple-digit returns from investments tied to Bitcoin mining.

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 investment also is not registered in Texas.

The common response to this by USI-Tech affiliates is that securities law doesn’t apply to bitcoin investment.

To this end USI-Tech affiliates claim the company’s mining contract investment opportunity is ‘a “certified legal product in the USA per the FTC.”’

According to the Securities Board that’s baloney, and the Securities Commissioner is having none of it.

The Federal Trade Commission, however, has no role in regulating registration of the mining investment as a security in Texas.

The State Securities Board regulates the registration of the mining investment as a security in Texas, the registration of dealers and agents offering and selling the product, and the disclosure of material facts to investors.

Despite claims that USI-Tech’s owners are “transparent”, the Securities Board points out that the company is anything but.

Disclosure violations include:

  • 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.

The Securities Board also calls out USI-Tech’s “deceptive” legal opinion.

Sales agents are attempting to deceive the public by claiming that USI-Tech has a “binding legal opinion” from a law firm stating the company is “a legal business in good standing.”

The emergency cease and desist order identifies Clifford Thomas and Michael Rivera as promoters of USI-Tech’s BTC Packs.

The order identifies USI-Tech’s BTC Packs as a securities offering, requiring both the company and its affiliates to be registered with the Texas Securities Board.

Allegations leveled at USI-Tech, Thomas and Rivera in the order  include:

  • violations of the Texas Securities Act by offering securities in Texas at a time when the securities are not registered with the Securities Commissioner
  • violations of the Texas Securities Act by offering securities for sale in Texas without being registered
  • engaging in fraud in connection with the offer for sale of securities
  • making offers containing statements that are material misleading or otherwise likely to deceive the public and
  • engaging in conduct, act and practicies that threaten immediate and irreparable public harm

The order demands USI-Tech, Thomas and Rivera immediately cease and desist from

  • offering for sale any security in Texas until the security is registered with the Securities Commissioner
  • acting as securities dealers or agents in Texas until USI-Tech, Thomas and Rivera are registered with the Securities Commissioner
  • engaging in any fraud in connection with the offer for sale of any security in Texas
  • offering securities in Texas through an offer containing a statement that is materially misleading or otherwise likely to deceive the public

If USI-Tech’s owners, Clifford Thomas and Michael Rivera continue to promote the BTC Pack Ponzi scheme in Texas, they risk a $5000 fine and two year prison sentence.

Being a Ponzi scheme USI-Tech is unlikely to register itself with US securities regulators, as that would mean disclosing it was using newly invested funds to pay off existing investors. What Thomas and Rivera do remains to be seen.

At this point I’d say it’s only a matter of time before the SEC takes on USI-Tech at a federal level, effectively ending promotion of the Ponzi scheme across the US for good.

This will likely result in USI-Tech collapse, as the US is by far the company’s largest source of investment revenue.

Stay tuned…

 

Update 6th January 2017 – Rather than comply with US securities regulations and provide evidence of external ROI revenue, USI-Tech has instead chosen to abandon operations in both the US and Canada.