The BitConnect lawsuit was filed after a director of the investment firm allegedly solicited the U.S. and global investors through Facebook, Twitter, and Reddit. The website itself funneled thousands of potential investors. Other defendants may also be liable, but the lawsuit is largely speculative and lacks specific facts to identify them. This article outlines some of the major claims made by the lawsuit. We’ll take a closer look at each of these claims in turn.
BitConnect is a digital asset
The SEC has filed a complaint against five promoters of the BitConnect digital asset lending program, alleging that they illegally sold digital asset securities. In May 2021, the SEC charged five BitConnect promoters, alleging violations of federal securities laws. The promoters created fake YouTube testimonials and received commissions for each investment made by retail investors. This scam eventually collapsed, leaving many retail investors with lost money. The SEC complaint names Trevon Brown, Craig Grant, and Ryan Maasen.
The SEC charged BitConnect, its founder, and promoters with securities fraud, for selling a digital asset that was a scam. The company promised investors that they would earn money trading bitcoin and would share profits with them. But the company failed to use any automated program to make money for its investors, and its promoters, led by Satish Kumbhani, siphoned off a portion of the bitcoin that was supposed to be used for investments.
It was sold without a regulatory financial license
The SEC has filed a lawsuit against five individuals accused of selling cryptocurrency on an unregistered exchange. The exchange, known as Bitconnect, allegedly made billions of dollars through a lending scheme without a broker’s license. The promoters of Bitconnect failed to register as brokers and securities dealers with the SEC, and they advertised fraudulent testimonial videos on YouTube. The SEC said the conduct violated the securities laws.
As a result, investors were concerned that the company was a Ponzi scheme. The company had an impossibly high payout schedule – 1% compounded each day – that made the money appear to be too good to be true. The payouts, however, fluctuated widely, depending on the price of Bitcoin. The FBI also posted a notice looking for BitConnect victims. These allegations have now led to the company’s closure.
It promised investors a 10 percent return per month
The cryptocurrency exchange BitConnect crashed last week, costing its investors millions of dollars in investment. However, the company was still able to make a YouTube meme out of the ICO’s video, which featured dancers, acrobats, and a live orchestra. As the company went under, videos were created featuring breakdowns, remixes, and “where are they now?” clips.
Despite this, BitConnect’s aggressive marketing campaign enticed many people to invest by promising large profits. BitConnect used a referral system to entice investors to share their links with their friends in exchange for bonuses. In addition, YouTubers advertised the “profit” the cryptocurrency could bring its investors, which encouraged more people to join. Many would-be investors were lured into investing with BitConnect’s lucrative promises and saw the value of Bitcoin skyrocket.
Its promoters were paid commissions for promoting it
According to the SEC, the promoters of BitConnect received referral commissions and “development funds” from the company to encourage investors to invest in its Lending Program. The promoters concealed this compensation from investors and received as much as $2.6 million in total compensation. One of the alleged defendants, Joshua Jeppesen, received nearly $25 million in compensation, including his commissions.
The SEC, however, charged five BitConnect promoters – but not the mastermind of the scheme. While a man from India is named in the charging documents, his identity is not revealed. However, this does not mean he didn’t know BitConnect was a scam. The case could signal heightened scrutiny of crypto promoters. In the meantime, Bitconnect is facing an uphill battle.
Its promoters have been sued by the Securities and Exchange Commission
The SEC has sued the promoters of BitConnect. Those involved in BitConnect received BCC tokens in exchange for bringing in new investors. The promoters then received commissions from the BitConnect investment program. The SEC’s action against the promoters of BitConnect is just the latest in a string of enforcement actions against digital assets. While the SEC has also sued exchanges, brokers, and issuers of virtual currencies, BitConnect promoters were accused of deceptive marketing.
The SEC’s lawsuit alleged that the promoters of BitConnect received kickbacks, referral commissions, and unreported “development funds” for their efforts to recruit investors. Arcaro and his business partner, Michael Noble, also received more than $25 million in compensation as a result of their efforts. The SEC also alleges that the promoters were aware of the existence of these “development funds” but did not disclose them to investors.
Its promoters have been sued by YouTube
YouTube has sued four defendants involved in a cryptocurrency-related Ponzi scheme: Bitconnect International PLC, BitConnect Ltd., BitConnect Public Limited, and BitConnect Trading Ltd. The consolidated lawsuit names over 22 legal violations, and is aimed at stopping the practice of promoting illegal Ponzi schemes on YouTube. Bitconnect promoters, however, should acknowledge they should have done more to prevent their affiliates from misleading investors.
The SEC, which regulates the securities industry, has also sued YouTube, alleging that the site facilitated the promotion of illegal digital assets. The SEC alleges that the promoters of BitConnect acted as intermediaries in an unauthorized offering of securities and received commissions for recruiting investors. BitConnect’s promoters posted YouTube testimonials promoting the lending program multiple times a day and made thousands of people believe that it was legitimate. The promoters also promoted the investment program by making videos that featured their own financial success stories.