Texas Regulators Issue Cease and Desist Against USI-Tech in Dubai

Regulators in Texas last month issued an emergency cease-and-desist order against USI-Tech Limited, a firm based in Dubai. The Texas State Securities Board in a December 20th statement, said that the Dubai-based firm, in conjunction with two U.S.-based sales agents had been unlawfully soliciting investors in dozens of Texan cities. USI-Tech promises low-risk, triple-digit returns from investments linked to mining Bitcoin.

The Texas regulators said that the company had been targeting Texan investors through YouTube videos, standalone websites and Craigs List advertisements. However, the company nor its sales agents, Clifford Thomas of Suitland, MD., and Michael Rivera of Los Angeles, CA, are registered to sell securities in the Southern state. Neither is the investment registered in Texas. USI-Tech claims that the mining contract is “a certified legal product in the USA per the FTC”.

Conversely, the Texas Securities Board wrote, “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.”

On its website, USI-Tech says it has built “the world’s first automated trading platform for the Bitcoin currency”, which enables “smaller investors to finally get involved in the FOREX and Bitcoin markets and have real success”. Its activities are centered on the sale of software for Bitcoin mining and trading. It offers investors commission money based on how many referrals they can generate, potentially “up to 35% commissions”.

The Securities Board was not pleased either about the referral aspect of the business, saying, “USI-Tech is not informing investors of the danger in being paid commissions from referrals”. The state body cautioned Texas residents that individuals who are paid such commissions would need to register this with the State Securities Board, or qualify for an exemption for registration.

The Texas regulators were also unhappy about the company’s claims for such high-yield investment. The USI-Tech website says its Bitcoin platform “consistently provides returns of up to 150% per year” and promised that the returns do not depend on the value of Bitcoin. They said that in addition to violating registration requirements in the state, the company and its sales agents were also “violating State Securities Board rules by failing to disclose information investors would need to make an informed decision about whether to invest”.

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