In the wake of US regulators cracking down on USI-Tech, the company has scrambled to contain fallout from disgruntled investors.
A big part of that has been silence on the part of USI-Tech management, who all but went into hiding after Texas issued a cease and desist last month.
Following the suspension of US and Canadian affiliate withdrawals, USI-Tech co-founder Horst Jicha has signaled an intention to defy US regulators and resume business operations.
As opposed to organizing a time USI-Tech management can address affiliates from a professional environment, Jicha calls into an affiliate webinar from a dentist appointment.
Jicha reveals he is currently hiding out in Brazil and has just seen a “private dentist”.
Fun fact: Brazil has no extradition treaty with the United States.
After dispensing pleasantries with host John Smith, Horst echoes the official company line since the US shutdown.
Essentially Jicha blames affiliates for USI-Tech’s failure to register its BTC Package securities offering in the US.
Amusingly, Jicha doesn’t cite the Texas cease and desist as the reason for USI-Tech’s departure.
Yup… Jicha blames USI-Tech affiliates for that as well.
[8:15] We realized in December there was an out of the system error in our system and huge abuse in our system from a lot of partners.
And finally that was the reason why we decided to switch off USA and Canada; in order to stop the wrong communication in the market, one thing, and stop the abuse as well.
As per the Texas cease and desist issued on December 20th, USI-Tech had ten days to request an emergency hearing on the matter.
This deadline came and went, with no response to the cease and desist from USI-Tech corporate.
From December 20th, USI-Tech had thirty-one days to provide the Texas Securities Board with the requested disclosures.
Primarily proof of external ROI revenue and specific details about their purported mining operations.
Jicha states that USI-Tech is preparing a “legal statement”.
[12:10] We are working since (US and Canadian withdrawals were suspended) on a legal statement, and we are almost there where we believe we can switch USI-Tech in the USA and Canada on again.
[12:36] Today I got the latest draft of our … legal statement (that we’re) going to make officially.
(It) points out loud and clear that we never had an issue, we as a company, in terms of unlegal [sic] activities.
But we have to discipline the marketing and sales activities. That’s also a part that we have to fulfill by coming out with a clear marketing and sales communication.
Jicha also tells USI-Tech affiliates that the company
[11:41] never did anything in terms of illegal things in the USA.
Which is a blatant lie.
USI-Tech was named as a respondent in the Texas cease and desist.
Two USI-Tech affiliates and the company itself were ordered to cease promoting its Bitcoin Package unregistered securities offering statewide.
USI-Tech was also ordered to provide requested disclosures to the Texas Securities Board by January 20th, which brings us to our next point.
What a “legal statement” issued by USI-Tech has to do with the Texas cease and desist is unclear.
John Smith’s interview with Jicha was streamed live on January 23rd, two days after the thirty-one day cease and desist deadline – and remember, Jicha states the legal statement is not yet ready.
As far as the Texas cease and desist goes, failure to respond will mean the Securities Board will deem USI-Tech as a company illegal in Texas.
That includes both operation as a company and promotion by US residents in Texas.
Yesterday Rory Highside reached out to the Texas Securities Board and confirmed USI-Tech failed to respond to the cease and desist order.
The time window to which the Order may be challenged has expired.
USI Tech can no longer exercise their right to challenge.
As per the email from the Texas State Securities Board above, the details of any ongoing investigation into USI-Tech are confidential.
This is on par with the SEC at a federal level, who also do not confirm or deny a regulatory investigation unless they proceed with litigation.
Jicha goes onto detail USI-Tech’s purported bitcoin and ethereum mining operations, including the recent disappearance of USI-Tech from the ethereum mining pool.
Jicha states this is because he asked their supplier to change the ethereum wallet the pool was attached to.
[22:19] I changed the wallet for security reasons, because the old wallet was not secure enough or whatever reasons, takes to long to explain that…
So I asked our supplier to change the wallet. He changed the wallet and finally the transparency was gone.
I said, “So where is out transparency?”
He said, “You asked us to change the wallet. Once you change the wallet the transparency is not connected to the wallet anymore. You can’t see it anymore.”
I’m by no means a cryptocurrency expert but this explanation makes little sense. What is publicly tracked are the largest ethereum mining pools.
What wallet they’re attached to shouldn’t affect a large mining pool appearing on the public ethereum blockchain.
Despite confirmation USI-Tech did not respond to the Texas cease and desist, Jicha provides specific plans to reopen USI-Tech in the US.
[15:17] We gunna continue to let people withdraw their return of BTC Packages, which is their money they have invested into our company.
But … we gunna do that in a controlled form, because I’m a bit afraid that that’s gunna be, once we switch it on again it’s gunna be like a bank robbery.
Everybody (will) think he has to take out or pull out as much as possible, because maybe it’s uh just for a short timeframe or whatever.
So it has to be in a controlled way in order to make sure that we protect the company.
If USI-Tech were indeed mining bitcoin and generating external ROI revenue as they represent to affiliates, investors withdrawing money they’ve already been paid wouldn’t be an issue.
What Jicha described above however is commonly known as a run on the bank, and is typically what happens in a Ponzi scheme when investors lose confidence in the scheme.
With new investment the only or primary source of ROI revenue, this naturally causes a prompt collapse.
This is evidently what Jicha fears most about letting US and Canadian USI-Tech affiliates withdraw again.
What that says about USI-Tech’s business model I’ll leave up to you.