WASHINGTON—Regulators are suing a cryptocurrency advocacy group that helped raise more than $2 billion from investors. It promises a 40% monthly return, which is one of the largest cases ever in digital assets.
The Securities and Exchange Commission on Friday sued five individuals in Manhattan federal court over the promotion of BitConnect. The SEC said the men violated laws requiring them to register as brokers and act. According to other investor protection rules, it does not accuse them of fraud.
The SEC’s lawsuit seeks to have the defendants return the money they made and pay civil fines.
BitConnect is a digital asset created in 2016 and sold in exchange for bitcoin, the world’s most valuable cryptocurrency. BitConnect tells investors to trade their bitcoin profitably using a “trading bot.” According to the SEC lawsuit, BitConnect eventually lost 92% of its value and investors lost all or nearly all of their funding in the loan program, the SEC lawsuit said, in the thousands. People invest in BitConnect
The SEC is suing BitConnect contributors Trevon Brown of Myrtle Beach, SC, Craig Grant of Kissimmee, Fla., Ryan Maasen of Tulsa, Okla., and Michael Noble of Pacific Palisades, Calif. The regulator is also suing Joshua Jeppesen of East Falmouth, Mass., for allegedly being the liaison between BitConnect and the promoter. Mr. Jeppesen has also represented BitConnect at meetings and other events.
The SEC̵7;s lawsuit said the founder of BitConnect was an Indian citizen who “founded, managed and controlled BitConnect at all times.” The court petition did not name the individual.
Supporters in the United States are part of a network that touts BitConnect’s lending program through YouTube videos, they have received hundreds of thousands of dollars in commissions and other payments, the SEC said. Jeppesen received 2.6. million US dollars, the SEC said.
Mr. Jeppesen’s attorney, Ian Friedman, said: “Our legal team has been working on this for some time. And we expect an amicable resolution soon.”
Ms Brown did not immediately return messages to relatives asking for comment. Grant, Maasen and Noble could not be reached for comment.
The SEC stated that the top sponsors have a chance to win a trip to Bangkok The same goes for cash and luxury cars.
Some retail investors pour everything they have into BitConnect, while their primary interest in cryptocurrencies It’s at fever pitch, The Wall Street Journal reported in December 2018. Texas regulators called it “the worst of all.” “Big Fraud”
The Texas Securities Commission ordered BitConnect in January 2018 to cease sales to residents of that state. In response, Mr. Brown created a video advising Texans to use an encrypted virtual private network to Covering their position and “continue to use BitConnect,” the SEC is accused in BitConnect lawsuits, losing most of its value shortly after the Texas mandate was issued.
A group of investors sued BitConnect in federal court in 2018. The lawsuit was dismissed, but the plaintiffs have appealed to the 11th Circuit Court of Appeals, attorney David Silver said.
“It’s been a long time but… I’m glad to see the SEC use its force to enforce the law,” Silver said on Friday.
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