The Securities and Exchange Commission (SEC) of the United States has brought charges against five persons for allegedly promoting BitConnect, a cryptocurrency investment program that resembled a Ponzi scheme.
BitConnect was a worldwide unregistered digital asset securities offering, according to the SEC. According to the SEC, the scheme used a network of promoters to generate nearly $2 billion from individual investors.
SEC Goes After Ponzi Shillers
Because the platform wasn’t a licensed broker-dealer, the regulator claims the platform’s “loan scheme” constituted a $2 billion unregistered securities offering. Bitconnect launched in 2016 and shut down its principal lending platform in early 2018 after facing fraud charges and regulatory warnings. In 2019, the FBI made a public appeal for possible BitConnect victims.
Trevon Brown, Craig Grant, Ryan Maasen, and Michael Noble are now being held accountable by the SEC for allegedly advertising the platform’s loan program’s benefits. According to the SEC’s lawsuit, they posted YouTube videos extolling their success utilizing the platform to collect investor cash and collected commissions for their efforts.
Joshua Jeppesen is also a defendant in the case, accused of acting as a go-between for BitConnect and its promoters. At events, Jeppesen represented BitConnect.
The complaint was filed in the Southern District of New York in the United States District Court. Injunctive relief, disgorgement with interest, and civil fines are among the remedies sought by the agency.
BitConnect promised investors that it would use their money to trade in Bitcoin and benefit from its volatility, and that it would pay them the gains, which BitConnect stated could be as high as 40% per month, according to the SEC’s accusations.
The Securities and Exchange Commission (SEC) has determined that initial coin offerings constitute securities offerings, requiring firms to submit registration and disclosure forms.
What is Bitconnect?
Bitconnect (also written BitConnect and styled bitconnect, ticker BCC) was an open-source cryptocurrency linked to the high-yield investment program bitconnect.co (a form of Ponzi scam). The coin’s value plunged to below $1 from a prior peak of about $500 when the site administrators halted the earning platform on January 16, 2018, and reimbursed the users’ BCC deposits.
Bitconnect was launched in 2016 with the intention of enabling users to lend Bitconnect currency value in exchange for interest payments. The star program was the so-called loan platform, which allowed users to swap Bitcoin for Bitconnect Coin and lock in the coin’s current value for a predetermined amount of time while receiving daily interest.
A so-called “trading bot” calculated the interest payment. The Bitconnect.co system’s trading bot was the most contentious component. Users were able to swap their profits for Bitcoin thanks to the BCC cryptocurrency’s liquidity.
“Bitconnect is not a company,” the admins said. Several companies emerged under the name Bitconnect, with well-known advocates serving as proprietors. It’s unclear if any funds or contracts were ever issued via these organizations.
Because of its multilevel marketing structure and unrealistically huge payments, Bitconnect was accused of being a Ponzi scheme.
Bitconnect’s popularity changed dramatically in tandem with the volatility of Bitcoin, to which it was linked.
The Bitconnect Coin was among the top 20 most successful cryptocurrency tokens in the world until its price plummeted as traders lost faith. BCC increased from $0.17 after the ICO to an all-time high of US$463 in December 2017, before falling to US$0.40 on March 11, 2019. Bitconnect released outstanding loans to the Bitconnect Wallet in the form of BCC at a rate of US$363.62.
However, the internal exchange price and liquidity dropped shortly following that announcement, resulting in a near-complete loss of value.