The US Securities and Exchange Commission has charged five people associated with BitConnect for illegally selling unregistered digital assets, which ended up raising more than $2 billion from individual investors.
According to Reuters, the SEC has alleged BitConnect, a
high-yield investment program Ponzi scheme, which was connected to an open-source cryptocurrency that could be traded for Bitcoin, sold digital securities without registering them as per US securities laws.
The agency named Trevon Brown, Craig Grant, Ryan Maasen, and Michael Noble among BitConnect’s promoters that advertised the illegal securities to potential investors via YouTube videos. The SEC has also charged Joshua Jeppesen, who represented BitConnect at numerous conferences and acted as a liaison between the promoters and the company.
BitConnect assured prospective retail traders that it would use their money to trade and subsequently profit from the volatility of Bitcoin, promising to transfer the profits back to the investors. At the time, BitConnect guaranteed that profits could be as high as 40% each month.
According to the SEC, the initial coin offerings should have been classified as securities offerings, and thus are subject to the agency’s laws on offerings. The rules require companies that sell such securities to file registration and disclosure documents.
Information for this briefing was found via Reuters. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.