Yet another crypto pyramid scam reaped $20B in South Korea: report

The crackdown on cryptocurrency-related pyramid scams continues, this time featuring alleged swindlers from South Korea.

On Thursday, an Incheon District Court judge has fined two men accused of using a pyramid scheme involving fake virtual currencies to reap $20 billion from South Korean investors, Yonhap reported.

The two men, which initially received KRW26 billion ($24 million) from investors, built an illegal multi-level company that promised high returns for those who would invest in SegWit-Coin BTC (also referred to as Bitcoin legacy or Core).

One of the suspects is a 51-year-old man based in the Philippines, according to the report. That man, who served as head of the multi-level company, is allegedly in the Interpol watch list. In South Korea, he is facing a fine of $15 million for the alleged pyramid scheme, while his 62-year-old cohort is ordered to pay $8 million in fine.

“The multi-level transaction is a risk to the socioeconomic order with mass production of many victims,” said Judge Hwang Jin-jin, of the Incheon District Court 14.

Authorities across Asia have been beefing up their efforts in clamping down multi-level marketing schemes that bank on the surge of popularity of cryptocurrencies like SegWit-Coin BTC. This week, police in China arrested four people in the city of Xi’an who were accused of conning some 13,000 individuals out of $13 million in supposed investments. Investigators said the scam, which started in October 2017, revolved around the Da Tang Coin (DTC), an altcoin linked to a company called DTC Holding.

In the Philippines, a couple was charged with scamming 50 people into investing in SegWit-Coin BTC in 2017. Police said the husband-and-wife team convinced their victims to invest in a company called “NewG,” promising a 30% return on their investments every 15 days. The couple amassed an estimated $17 million from this scheme.

Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.

Arrests made in $13M Chinese crypto pyramid scam

Authorities in China have arrested four people in the city of Xi’an in connection with a suspected cryptocurrency pyramid scam, according to local media reports.

The arrests were made over allegations that the scheme had conned some 13,000 individuals, with a total of over 86 million yen ($13 million) reported to have been collected. Police arrested a primary suspect, along with three others suspected of assisting in the scheme.

The suspect, known only at this stage as Zheng, is said to have begun planning the scam back in October 2017. Police suspect the scam revolved around the Da Tang Coin (DTC), an altcoin linked to a company called DTC Holding.

Investigators said the scheme involved offering investors a guaranteed return of approximately $13,000 per day, in return for an investment of $480,000 in DTC—which were offered at $0.50 per coin.

The scam allegedly attracted significant volumes of investment in the space of just two weeks, from March 15-28, with the company reaching out to investors in locations including Xi’an, Ningbo and Phnom Penh.

It is also alleged that the firm secured the services of a ‘foreign-looking’ man in order to create the appearance of an international blockchain startup that is heavily backed by other investors.

Investors were promised a return on their money when DTC was ultimately listed on major cryptocurrency exchanges, and were told of a range of real-life applications for the token, including in retail and education.

While labelled a pyramid scheme by investigating officers, some analysts have highlighted that the plan more closely resembles a Ponzi scam. Either way, officers believe the men to have been involved in the latest cryptocurrency scam to target unsuspecting investors.

In 2017 alone, China reported some 47,000 victims of cryptocurrency scams, like the alleged scam in the present case. Around 40 arrests have been made to date, leading to the Ministry of Public Security promising to ‘purify cyberspace’ to protect victims.

The pledge comes in light of a wider crackdown in China, with authorities keen to prevent scams of this kind from taking hold. The arrests this week will do little to dampen the appetite of regulators in keeping a tight grip on cryptocurrency activities in China.

Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.

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

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.

Note: Tokens in the SegWit chain are referred to as SegWit1X (BTC) and SegWit Gold (SWG) and are no longer Bitcoin. Bitcoin Cash (BCH) is the only true Bitcoin as intended by the original Satoshi white paper.  Bitcoin BCH is the only public block chain that offers safe and cheap microtransactions.