Regulators Shut Down Bitcoin Scams
Bitcoin investment company, USI-Tech, was hit with a cease-and-desist order by the Texas State Securities Board on December 20th.
In response, USI-Tech has closed marketing operations and direct sales in the U.S. and Canada by terminating distributor agreements with it's U.S. and Canadian sales affiliates.
The company is currently evaluating their customer relationships with U.S. and Canadian customers.
The TSSB order was based on USI-Tech soliciting investors through Youtube videos, online websites, Craigslist posting, etc without being registered to sell securities in Texas. USI-Tech was promoting low-risk, triple-digit returns from investments tied to Bitcoin mining.
Apparently, the company decided to close operations in U.S. and Canada rather than provide documentation and information that they are not a Ponzi scheme.
The company had been promoting the ability of distributors to make money through a unique referral marketing program.
BitConnect, another cryptocurrency promoter was issued a cease-and-desist order to stop fraudulent sales on January 4th by the TSSB. The issue again was the sale of unregistered investment securities in the form of an Initial Coin Offering (ICO).
Initial Coin Offerings (ICO) are the cryptocurrency market equivalent to the stock market Initial Public Offering (IPO) of stock.
An ICO is a way to raise funds by issuing a new digital coin (cryptocurrency). The new digital coin is exchanged for either cash, bitcoin, or other digital coin.
The U.S. Securities Exchange Commission has initiated fraud charges against PlexCoin and their ICO. The SEC has also issued warnings to celebrities who endorse cryptocurrency offerings under the unlawful promotion regulations.
This is a warning to all investors: Be careful and do your homework.
And if you are successful finding a legitimate investment in cryptocurrencies, do not forget about the tax man. The IRS will want their share of your profits. So talk to your tax professional.
Recent Comments
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Thanks for sharing this article. Bitcoin is a decentralized currency that allows mining farms confirm the transaction and when it does, we get the pay outs directly from the blockchain technology. A lot people are quick to call it out as a Ponzi scheme, as an early adopter with bitcoin, it's no where close to that because it's the machines that is making us money when we leverage our cash to turn our bitcoin valuable. But thanks for sharing this article! All the best.
The Ponzi scheme issue arises when companies/promoters make guarantees as to payout percentages. Assuming a static bitcoin price, how big a mining operation is required to generate 1% growth a day in quantity of bitcoin, for example?
Usi-Tech was promoting a 1% daily return. The regulators were questioning how they derived the revenue to pay their investors.
The question is whether a mining operation can extract enough bitcoin to pay 1% daily returns. Or is the company using new investor money to pay old investors their 1%.
I agree with you Deahustle. I have made a lot of money from cryptocurrency it has literally changed my life! But Glen Makes a great pointed.
Just as Glen Stated please pay your taxes, cryptocurrency is now treated like stocks. If you have short-term capital gains (If you withdraw any profits under a year of ownership) you have to pay normal income taxes. you also have to pay taxes on exchanging cryptocurrency for cryptocurrency...As long as you are playing by the rules you are ok.I recommend finding a CPA. CPAs make life so much easier and remember its all a gamble.
Hi there,
Many thanks for this update and informational post.
I have heard and read some rave reviews about Bitcoin recently and that was actually about the genuine Bitcoin that started up about 10 years ago.
The price of one Bitcoin is now approx $15,000...
That has started a slwe of other bitcoin operators to flood the market, promising triple digit returns for their investment.
I have seen a few bitcoin operators being expelled from some countries over here in europe, notably OneCoin, another shady operator one suspects.
Thanks again for the heads-up
Best wishes
Cheers PB
You are welcome, Phil.
One UK news source writes about bitcoin price manipulators being very public about their pump-and-dump tactics.
At this point, I just don't know how anyone could evaluate any cryptocurrency investment for legitimacy. I certainly can't.
Always be careful, there are quite some scammers out there, I just read CoachGom's blog about this too. According to his findings, this was bound to happen, due to the rattling payment structure of USI-tech
The Texas regulators were most interested in whether the company was generating revenue externally. Or whether current investors were being paid from funds from new investors. In other words, a Ponzi scheme.
this will definitely help my Review which I am in the process of writing for my website. thank you for this enlightenment, and as Michael rightfully said, Is about time.
Make it a great weekend!
I am glad it helps, David. I think there will be many unhappy bitcoin investors in the future.
Yes, especially a good friend of mine who made me join Empower network back then and was trying for me to join Bitcoin, saying that This Is The one. if you know what I mean? thanks!
PS: I may even forward this post to him, Nah! just kidding! do not want to hurt is feeling. Take care, Glen.
I joined EN in the early, early days. But I had to sign up for a credit card merchant account if I wanted to get paid. I didn't want to go through the hassle of setting up an account and paying fees. So I left.
Good for you, I made money in the earlies but then they started to add some more High-end products. Then I decided where they were heading, so I decided to end it, I told all my referrals and they agree with me and most of them did the same.
I stayed away from marketing online for awhile until I saw WA by browsing the internet, and was brought in by Kyle. Now my approach is a lot different which I had to start all over again.
Glad I did.
Thanks for the information. I've invested in some cryptocurrency recently and I'm just going to let sit there for awhile.
That's what I have done. I bought a small amount and have it sitting in my bitcoin wallet. I have also done some cloud-based bitcoin mining. But that just gets pennies worth a day. The exchange fees would wipe out any gains.
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I agree with you so many companies are jumping on the bandwagon of cryptocurrency when they know nothing about it and promising the moon, so buyer beware!
For sure, Davida. It's a gamble.
the best way to trade bitcoin is on reputable sites where they nothing but buy/sell cryptocurrency and there's no other product attached to it
Hi, Davida.
You are correct.
The whole cryptocurrency concept is designed for peer-to-peer.
Be very careful when there is a third party involved especially one promoting an MLM proposition.
Kindest regards,
Paul.