SEC Takes Legal Action Against Cryptocurrency Promoters Over Deal That Raised $2 Billion
< img src=" https://images.wsj.net/im-346123/social" class=" ff-og-image-inserted"/ > WASHINGTON– Regulators sued a group of cryptocurrency promoters who assisted raise over $2 billion from investors with the promise of 40% regular monthly returns, in one of the biggest cases ever brought over digital assets.The Securities and Exchange Commission on Friday sued 5 people in Manhattan federal court over their promotion of BitConnect. The SEC said the men broke laws that needed them to register as brokers and ran afoul of other investor-protection rules. It didn’t implicate them of scams.
The SEC’s suit looks for to have the defendants return the money they made and to pay civil financial penalties.
BitConnect was a digital property produced in 2016 and offered in exchange for bitcoin, the world’s most important cryptocurrency. BitConnect told financiers it would beneficially trade their bitcoin using an automated “trading bot” and needed the currency to be secured for terms ranging from 4 to 10 months, according to the SEC’s suit. BitConnect ultimately lost 92% of its value, and financiers lost all or nearly all of their funds in the loaning program, the SEC’s lawsuit stated. Thousands bought BitConnect.
The SEC sued BitConnect promoters Trevon Brown of Myrtle Beach, S.C., Craig Grant of Kissimmee, Fla., Ryan Maasen of Tulsa, Okla., and Michael Noble of Pacific Palisades, Calif. Regulators also took legal action against Joshua Jeppesen of East Falmouth, Mass., who apparently was a liaison in between BitConnect and the promoters. Mr. Jeppesen likewise represented BitConnect at conferences and other occasions.
The SEC’s lawsuit stated BitConnect’s creator is an Indian resident who “founded, managed and managed BitConnect at all times.” The court problem doesn’t name the individual.
The U.S. promoters were part of a network that touted BitConnect’s financing program through videos on YouTube. They made hundreds of thousands of dollars each in commissions and other payments, the SEC said. Mr. Jeppesen earned $2.6 million, the SEC alleged.
Ian Friedman, a lawyer for Mr. Jeppesen, said: “Our legal team has been dealing with this matter for rather a long time, and we anticipate a friendly resolution soon.”
Mr. Brown didn’t immediately return a message left with a relative seeking comment. Messrs. Grant, Maasen and Noble couldn’t be reached for comment.
Top promoters were qualified to win journeys to Bangkok along with money and high-end cars and trucks, the SEC said.
Some private investors poured everything they had into BitConnect, at a time when mainstream interest in cryptocurrencies was at a fever pitch, The Wall Street Journal reported in December 2018. Texas state regulators called it a “massive fraud.”
The Texas State Securities Board ordered BitConnect in January 2018 to stop sales to homeowners of that state. In response, Mr. Brown developed a video that advised Texans to use an encrypted virtual private network to cloak their location and “keep using BitConnect,” the SEC declared in its claim. BitConnect lost the majority of its worth quickly after the Texas order was issued.
A class-action group of financiers sued BitConnect in federal court in 2018. The claim was dismissed, but the plaintiffs have actually appealed to the U.S. Court of Appeals for the 11th Circuit, stated attorney David Silver.
” This is a long time coming but … I enjoy to see the SEC using its force to apply the law,” Mr. Silver stated Friday.
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