The USI Tech conundrum—is it a pyramid scam or not?

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Cryptocurrencies have taken a bit of a bad name due to their volatility but there is another factor in the equation—the propensity to the creation of pyramid and Ponzi schemes.

One of the schemes that has had quite a bad press is the one run by USI Tech, a company which purports to base itself in the United States but is actually based in Dubai and is not regulated by the U.S. Securities and Exchange Commission.

USI Tech has also abandoned operations in the United States and Canada, according to a statement issued in January. They are also in the habit of posting long and detailed posts on their website and Facebook page that confuse those who have invested time and money into the scheme.

In Canada, the state of Saskatchewan has extended a cease trade order against the Dubai-based bitcoin marketing company until the summer. A similar order against the company has also been issued in Ontario. According to the Ontario Securities Commission, USI Tech sold people “bitcoin packages.”

In an attempt to stop promotion of the USI Tech Ponzi scheme throughout Texas, the U.S. securities commissioner issued an emergency cease and desist on December 20.

The emergency cease and desist targeted two U.S.-based USI Tech promoters, Clifford Thomas and Michael Rivera. In addition to USI Tech, Rivera is also promoting the BitConnect Ponzi scheme supposedly based on a cryptocurrency that will be launched through an ICO, authorities said.

According to the Texas Securities Board, USI Tech is an overseas firm that is promising low-risk, triple-digit returns from investments tied to legacy Bitcoin (BTC) mining. However, 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 is also not registered in Texas.

The common response to this by USI Tech affiliates is that securities law doesn’t apply to BTC investments. 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.” That answer has been strongly denied by the SEC.

USI Tech is a clear cut pyramid scheme and there is no doubt on that because pyramid schemes are those companies which pay commissions up to multi-level downlines like MLM companies, but without selling any real products or services, just on the upgrade fees or investment ROI packages like USI Tech has been paying.

To qualify for referral commission, USI Tech affiliate needs to pay €600 for a forex bot fee and also need to recruit three affiliates who also pay €600 for same thing, or three affiliates who together invest a minimum of €600 ($739) in BTC. But, that forex bot is not any useful or legal software. And even if that was a real product, then also making business plan where members must purchase the product to take part in the MLM program makes it once again a pyramid scheme. So, it is a straightforward pyramid scheme.

USI Tech claims to be from the United States, but after a background check was run, it appears that they are from Dubai, United Arab Emirates. However, even if we agree they are from U.S., then they should be available in the SEC’s Edgar database, but nothing comes up in the name of USI Tech when we check SEC database. USI Tech isn’t registered to offer securities in any jurisdiction they operate in. A legitimate company cannot offer securities to U.S. residents without SEC registration, proving that USI Tech is not being straightforward in their business dealings, among other things.