It’s a wonder that buyers still exist for new cryptocurrrencies that show no signs of any serious underpinnings to support their claims. The complaint for this class action alleges that BitConnect coins are unregistered securities, a fraud, and a Ponzi scheme.
The class for this action is all those in the US who transferred currency or cryptocurrency to BitConnect, in furtherance of defendants’ scheme, and lost money as a result thereof, at any time since its initial coin offering (ICO) on November 15, 2016. Florida and Rhode Island subclasses have also been proposed.
The defendants companies in this case include BitConnect, BitConnect Ltd., BitConnect International PLC, and BitConnect Trading Ltd., which conduct business primarily through the website www.bitconnect.co. The companies are registered in the UK; the individual defendants are Americans; but people who are not native speakers of English seem to have written the BitConnect materials quoted.
According to the complaint, investors are directed to buy Bitcoins, trade them for BitConnect coins, and keep them in a BitConnect wallet, with the promise that the coins will earn interest in a complicated scheme that shows no income except a Ponzi scheme type of reliance on money coming in from the next group of investors.
The complaint quotes the defendants’ website as using words like “financial security,” “practical and attainable,” and “financial freedom,” and claiming that BitConnect coins are “an interest bearing asset with 120% return per year.”
The “income” from BitConnect coins is purportedly obtained through up to 40% interest earned per month over a specified period, an additional daily rate of interest, profits generated by a secret trading system called “volatility software,” and a commission on purchases made by referrals that extends through seven layers of additional referrals. Investors gain all this, BitConnect says, “without having to undergo a significant amount of risk.”
The complaint claims that just a month before collapsing, BitConnect was still promising returns of up to 40% per month. However, the complaint says, BitConnect received cease-and-desist letters from authorities in Texas and North Carolina, causing its coins to lose 90% of their value.
The complaint alleges that BitConnect coins are unregistered securities, sold by unregistered salespeople, in violation of the Securities Act of 1933. Among other things, it claims that the defendants have engaged in fraud in the purchase or sale of securities in violation of the Securities Exchange Act of 1934, as well as common fraud.
Article Type: LawsuitTopic: Securities Fraud
Most Recent Case Event
BitConnect Coin Unregistered Securities and Fraud Securities Complaint
February 7, 2018
It’s a wonder that buyers still exist for new cryptocurrrencies that show no signs of any serious underpinnings to support their claims. The complaint for this class action alleges that BitConnect coins are unregistered securities, a fraud, and a Ponzi scheme. Income from BitConnect coins is purportedly obtained through up to 40% interest per month, an additional daily rate of interest, profits generated by “volatility software,” and a commission on purchases made by referrals. The complaint alleges that BitConnect coins are unregistered securities, sold in violation of the Securities Act of 1933, and that the defendants have engaged in common fraud as well as fraud in the purchase or sale of securities in violation of the Securities Exchange Act of 1934.
bitconnect_sec_compl.pdfCase Event History
BitConnect Coin Unregistered Securities and Fraud Securities Complaint
February 7, 2018
It’s a wonder that buyers still exist for new cryptocurrrencies that show no signs of any serious underpinnings to support their claims. The complaint for this class action alleges that BitConnect coins are unregistered securities, a fraud, and a Ponzi scheme. Income from BitConnect coins is purportedly obtained through up to 40% interest per month, an additional daily rate of interest, profits generated by “volatility software,” and a commission on purchases made by referrals. The complaint alleges that BitConnect coins are unregistered securities, sold in violation of the Securities Act of 1933, and that the defendants have engaged in common fraud as well as fraud in the purchase or sale of securities in violation of the Securities Exchange Act of 1934.
bitconnect_sec_compl.pdf