Two US states join forces to stop a fraudulent digital currency miner

It should be apparent by now to anyone looking to secure investments for digital asset operations that their efforts will be scrutinized, especially if they plan on working in the digital currency space. Still, some individuals can’t grasp the concept of operating an aboveboard business and continue to introduce fraudulent initiatives. A digital currency mining company is facing the wrath of securities regulators in two states, as Texas and Alabama have joined forces to bring a halt to the fraud being perpetrated by Ultra BTC Mining (UBM). 

The securities watchdogs filed for an immediate cease-and-desist order against the Nevada-based company for making wild claims over what investors would earn from their investments. The Texas order (in pdf) asserts that the company claims it is a “cryptocurrency cloud mining company that hots third-party mining farms around the world.” UBM was telling victims that they would see returns of $10,500 for a $10,000 investment, and apparently received a substantial amount of interest. The company is reported to have received as much as $18 million from unsuspecting victims. 

However, none of that money was actually used for its purported targets – improving operations of the company, expanding its mining capabilities and, taking advantage of the current health scare, fighting the coronavirus. It asserted to potential investors that, because the price of BTC was going to increase, their investments would increase, and that it had donated over $100,000 to COVID-19 causes, an assertion it hasn’t been able to back up with evidence. 

Alabama’s order (in pdf) explains, “ULTRA is offering an investment opportunity, on their website, in the form of ‘mining plans’ wherein investors invest monetary value in two-year plans for the purpose of mining cryptocurrencies. The mining activities are to be performed or leased by ULTRA and the investment return is based on the ‘hash rate’ purchased. ULTRA represents that investors will benefit from the connection to mining pools.”

Due to the way the investment offer is worded, and the returns it suggests, it is deemed to be a securities offering. As such, the company was obligated to register the securities, which it didn’t do, and this leads the regulators to accuse UBM of “engaging in fraud.” The regulators add, “Ultra Mining and [agent Laura] Branch, neither of whom are registered to sell securities in Texas, are also failing to disclose the principals or financials of its cryptocurrency mining operation.”

UBM has 30 days to respond to the order; if it doesn’t, the order stands as is and the company will be deemed guilty as charged. If that happens, Branch, and possibly anyone that is found to have been involved, can face from 2-10 years in prison and/or a $10,000 fine in Texas. 

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