Regulators in Texas have obtained an emergency cease-and-desist order against a company they say is unlawfully pitching bitcoin mining investment plans in the state.
In a statement yesterday, the Texas State Securities Board revealed that it had taken action against USI-Tech Limited, a firm based in Dubai. The firm has allegedly been trying to sell investment contracts in “dozens of Texas cities” by way of social media videos, dedicated websites, and advertisements on sites like Craigslist. It names two U.S.-based agents, Clifford Thomas of Maryland and Michael Rivera of California.
Regulators said that those pitching the securities offered daily returns – a structure reminiscent of high-yield investment plans that boast steady gains. Further, the solicitations reportedly encourage prospective investors to find others to buy in so that they can make money from “referrals.”
The Securities Board wrote:
“The agents’ websites claim the mining investment “derives its value from [USI-Tech’s] non-exclusive interest in a series of bitcoin mining contracts.’ They promise a daily return of 1%. The USI-Tech website says its bitcoin platform “consistently provides returns of up to 150% per year.” The returns do not depend on the value of bitcoin, according to the company.”
According to the statement, those named in the cease-and-desist order were accused of violating Texas securities registration standards and failing to disclose the risks involved in bitcoin mining.
“In addition to violating registration requirements, USI-Tech and the sales agents are violating State Securities Board rules by failing to disclose information investors would need to make an informed decision about whether to invest,” the agency added.
The full cease-and-desist letter can be found below:
Texas flag image via Shutterstock
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