A Securities and Exchange Commission (SEC) civil lawsuit has been filed against five individuals allegedly involved in promoting BitConnect’s “loan program.” BitConnect closed its main lending platform operations in 2018 after regulatory warnings and allegations of fraud.
The SEC’s civil lawsuit
In a press release issued today on the SEC’s website, the body alleges that the individuals helped promote and raise more than $ 2 billion from retail investors in an offering of unregistered digital asset securities. The issued lawsuit alleges that a network of promoters, four of the five defendants, offered and sold securities as part of the platform’s loan program without being registered as stockbrokers and without registering the securities with the SEC. This includes a series of “testimonial” style videos, the press release says, uploaded to YouTube to justify the program’s merits. The promoters received commissions based on their success in applying for funds, the complaint states.
The fifth person named in the complaint is charged with “aiding and abetting” the offer and unrecorded sales, as a liaison between BitConnect and the promoters, and as a representative of the company at events and conferences.
In the press release, New York SEC Associate Regional Director Lara Shalov Mehraban stated that “we allege that these defendants illegally sold unregistered digital asset securities by actively promoting the BitConnect loan program to retail investors. We will seek to hold accountable those who profit illegally by capitalizing on the public’s interest in digital assets. “
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The BitConnect story
The platform was initially launched in 2016, in parallel with BitConnect Coin (BCC); the company took advantage of the so-called “trading robot” and offered high-yielding returns to users with interest calculated daily. Over the following year, UK government bodies required BitConnect to verify its legitimacy, and by 2018, operations began shutting down following increased pressure from the government in the US.
BitConnect Coin, at its high trading point at nearly $ 500, immediately dropped more than 90% after the close. The state securities divisions had begun lobbying just before the shutdown, even claiming that BitConnect was a Ponzi scheme and that BitConnect was not registered to sell securities in their respective states. Within weeks, BitConnect’s assets were frozen following a temporary restraining order.
It was certainly a dramatic rise and fall for BitConnect. Enjoy the past with our NewsBTC article after the platform closes.
$ XRP is the latest token to face SEC scrutiny. | Source: XRP-USD on TradingView.com
With the continued emergence of broader crypto and blockchain technologies, platforms, and projects, the SEC has been active in recent years. In particular, Ripple’s XRP has been at the forefront of the SEC investigation and there is speculation about the potential to develop a “Ripple Test” as the Howey Test could be maxed out as part of the review of the SEC. Generally speaking, Ripple Labs is viewed by many as quite capable of withstanding SEC scrutiny, and Ripple CEO Brad Garlinghouse recently stated that it is highly likely that Ripple Labs will go public following the SEC’s ruling. The SEC alleges that Ripple participated in lobbying efforts to alter the public’s perception of XRP.
Related reading | Here’s why despite SEC charges, XRP will skyrocket again one day
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