Bitqyck affiliate Scott Brewster stated on March 2nd that the company plans to offer unregistered securities through an "international mining organization" based in Asia. This move appears intended to circumvent U.S. securities laws that would require Bitqyck to register its investment program with the Securities and Exchange Commission (SEC).
Brewster explained that the North American legal structure makes it difficult to pay affiliates for recruiting new participants into mining operations. He claimed that Bitqyck cannot legally operate its current MLM mining opportunity within the U.S. Instead, the company will maintain its existing structure under the Bitqyck umbrella while launching a separate, international mining entity. This new organization will operate under entirely separate ownership and management, with a distinct operational base in Asia.
The core of Bitqyck's business model involves affiliates investing funds with the expectation of receiving a passive return, purportedly generated through cryptocurrency mining. Such investment schemes are legal in the U.S. provided the company registers its securities offering with the SEC and is fully transparent about its mining revenue. However, Bitqyck has avoided mentioning mining on its public website, suggesting a desire to bypass these regulatory requirements.
The company previously sold cloud mining contracts to U.S. residents for $1000, a move announced around July. This offering was reportedly conducted with considerable secrecy. Brewster indicated that U.S. Bitqyck affiliates would not be permitted to invest directly in the new Asian operation, a measure that might be seen as a partial attempt at compliance.
However, offering and promoting unregistered securities for financial gain, including referral commissions, remains illegal even if targeted at non-U.S. residents. Bitqyck is a U.S.-based MLM company with a significant portion of its website traffic originating from the United States, indicating a predominantly U.S. affiliate base. Creating an offshore entity to offer unregistered securities, while the parent company and its management remain in the U.S., is unlikely to satisfy regulatory scrutiny from the SEC.
Despite these legal complexities, Brewster indicated that Bitqyck co-founder Bruce Bise is actively developing a replicated website for the Asian launch. This new platform will be presented to international investors, with different versions offered to sign-ups in various countries, including Spain. This suggests a deliberate effort to segment investors and obscure the true nature of the operation from U.S. regulators.
The bitqy altcoin, attached to Bitqyck, saw a significant price surge shortly after its launch, reaching 6.5 cents in late October. However, it has since plummeted to approximately 0.4 cents.
Bitqyck's approach of establishing a separate international entity to offer unregistered securities may be an attempt to create a facade of compliance. However, regulators typically look beyond corporate structures to the substance of the transaction and the location of the promoters and investors. The SEC has a history of pursuing companies that attempt to circumvent U.S. securities laws through offshore arrangements.