Following an investigation by the Manatoba Securities Commission, USI-Tech has been compared to that of Ponzi and pyramid schemes.
According to a December 22nd Manitoba Securities Commission investor warning, a resident of Winnipeg contacted the regulator after investing $20,000 into USI-Tech.
A Winnipeg man learned about USI-TECH while working in Abu Dhabi, UAE, and personally invested $20,000 USD.
He then began promoting it to local investors on his return. The Manitoba investors were told to buy Bitcoin from Coinbase—a San Francisco-based digital currency exchange—and then provide Coinbase information to transfer the Bitcoin to USI-TECH.
USI-TECH that allegedly invests in an arbitrage trading strategy that purports to pay a one per cent return per day over a 140-day period.
USI-TECH also purportedly pays a 10 to 35 per cent ‘referral fee’ for bringing in new investors.
On the USI-TECH website, investors are promised no up-front fees, and are free to register, but must provide €50 ($75 CAN) of ‘starting capital’.
It also says you must pay a ‘one-time software licensing fee.’ The site promises “consistent returns of up to 150 per cent per year,” and “minimal risk with maximised profits.”
High returns with little to no risk are common claims made in a financial fraud.
The website also contradicts its own overt claims with an obscure page called ‘Risk Information’ stating, “Forex and CFDs are leveraged products and involve a high level of risk. It is possible to lose all your capital.”
In a Pyramid or Ponzi scheme, investors are promised high returns.
They operate by paying interest to ‘investors’ with money brought in by new ‘investors.’
These new investors are attracted by stories of people claiming to be getting high returns, and in some cases by receiving small amounts of money back in the early stages of the scheme.
These schemes inevitably collapse, and investors lose money.
Despite the possibility of being held liable for securities violations, the Winnipeg resident nonetheless reported USI-Tech to authorities.
“This model of recruiting has similar characteristics of a multi-level marketing/Pyramid scheme,” says Jason Roy, senior investigator with the MSC.
“The individual who has come forward has convinced friends to invest in USI-TECH, and has profited through recruitment fees.
“Something many people do not realize, is that actively soliciting others to participate in this type of scheme is a violation of The Securities Act,” says Roy, “meaning that your participation can leave you open to sanctions—including serious financial penalties.”
In line with regulatory warnings issued in the Canadian provinces of British Columbia, New Brunswick and Nova Scotia over the past week, Manatobian authorities have taken issue with USI-Tech’s illegal offering of unregistered securities.
USI-TECH is not, and has never been, registered to trade securities in Manitoba.
The Manitoba Securities Commission advises any locals who have been approached to join USI-Tech or who might have already joined to contact the commission.