The defendants were part of a network of influencers that raised more than USD 2 billion. The promoters were not registered as brokers with the SEC as the law requires.
In recent days, the US Securities and Exchange Commission (SEC) filed a lawsuit against five people who traded unregistered securities. In a statement, the federal agency said that the defendants were violating US federal laws.
Bitconnect has operated as a cryptocurrency market investment scheme since 2016. It created a network of sellers worldwide, who raised over USD 2 billion.
Through the Southern District Court of New York, the SEC reported on the lawsuit in which it accuses four promoters based in the United States. They are Trevon Brown (also known as Trevon James), Craig Grant, Ryan Maasen, and Michael Noble (who became known as Michael Crypto). None of them were registered as a stockbroker with the US securities industry regulator, according to the statement.
The promoters recommended investing in cryptocurrencies through BitConnect testimonial-like videos that they often published on YouTube. The report notes that their ability to attract small investors allowed them to earn commissions of up to around 40% per month.
The other defendant who was helping to expand the network of fraudulent sellers is Joshua Jeppesen. He appeared at conferences and promotional events to attract potential influencers and small investors.
“We will seek to hold accountable those who illegally profit by capitalizing on the public’s interest in digital assets,” said Lara Shalov Mehraban. The associate regional director of the New York Regional Office of the SEC believes that the authorities should stop them scamming more people.
There Are Traces of That Ponzi Scheme in Various Parts of the World
The launch of BitConnect as a cryptocurrency that was only possible to trade on the exchange of the same name occurred in 2016. Securities regulators warned investors about the company’s alleged fraud, which is why its website closed in 2018.
The reasons for the indictment against Bitconnect included a complete and intentional ignorance of the identity of the directors of Bitconnect. Besides, they did not have financial information on the founders and the company did not have headquarters in Texas, USA. The reason for the latter was that it was registered with headquarters in Wenlock Road, London.
The project received several class-action lawsuits from the United States and even the United Kingdom after the company closed. The victims were requesting a refund of around USD 770,000 that they had lost through the platform. However, a Florida State District Court judge dismissed the lawsuit 3 years later.
There have been more accusations from various countries including Singapore, India, and Australia. There, the authorities have banned the scheme and have even made arrests. In August 2018, Divyesh Darji, one of the leaders of BitConnect India, went to prison after being on the run for several months.
After that, the FBI decided to search for the victims of the scheme who wanted to help with the investigation. For that reason, it posted an online questionnaire for anyone with information to aid in the federal assessment. The consultation requested investors for their personal and contact details, as well as information related to the amount that they invested in the BitConnect Coin (BCC) token.
By Alexander Salazar