(Bloomberg) — The German founder of USI Tech, a crypto mining company and digital-asset trading platform, was charged by federal prosecutors in New York with defrauding investors of about $150 million in an illegal multilevel marketing scheme.
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Horst Jicha, 64, faces securities fraud, money laundering, wire fraud and other charges, authorities said Friday. After promising investors returns of as much as 140%, he shut down the USI online platform and transferred much of its Bitcoin and Ether assets to accounts he controlled, according to an indictment. He was arrested Dec. 23 while attempting to vacation in Miami, prosecutors said.
Jicha, who lived in Brazil and Spain, claimed in 2017 that USI was the world’s first automated Bitcoin trading platform and that it made crypto investments more accessible to retail investors. He raised money from US investors with aggressive marketing pitches in places like New York and Las Vegas, according to the indictment. After authorities began investigating, Jicha closed the platform in March 2018, blocking withdrawals of about $150 million of investor-owned cryptoassets that remain missing, prosecutors said.
“The platform was just a facade, and when questions arose, Jicha stole millions of his investors’ money and fled the country,” James Smith, head of the FBI’s New York office, said Friday in a statement.
“Although the defendant did not return to the United States for half a decade, my office and the FBI worked to ensure that when he did, he would be brought to justice,” said Brooklyn US Attorney Breon Peace, whose office is prosecuting the case.
Jicha was arraigned Friday before a US magistrate in Brooklyn, where he pleaded not guilty. He was released on $5 million bond.
“It’s always difficult when investors have suffered losses at the hands of certain bad actors,” Jicha lawyers Marissel Descalzo and David Tarras said in a statement. “We look forward to zealously defending the allegations against Mr. Jicha and bringing forth the facts of his involvement with USI Tech in hopes that the bad actors will be brought to justice.”
The most serious charges Jicha faces carry a term of as long as 20 years in prison.
The case is US v Jicha, 23-CR-342, US District Court for the Eastern District of New York (Brooklyn).
(Adds comment from defense lawyers in seventh paragraph.)
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