U.S SEC Sues 5 Over $2B Bitconnect Ponzi Scheme

BitConnect

May 29, 2021

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The U.S Securities and Exchange Commission (SEC) stated today that it has filed an action against five people for allegedly promoting BitConnect, an unregistered digital asset securities offering. The scheme is estimated to have generated more than $2 billion from retail investors.

SEC’s complaint

According to the SEC’s complaint, which was filed in the United States District Court for the Southern District of New York, BitConnect used a network of promoters, including US-based Trevon Brown, Craig Grant, Ryan Maasen, and Michael Noble, to market and sell securities in its lending program from approximately January 2017 to January 2018.

According to the SEC’s complaint, these promoters offered and sold securities without registering the securities offering with the Commission or registering as broker-dealers with the Commission, as required by federal securities laws.

The advocates promoted the benefits of participating in BitConnect’s loan program to potential investors by generating “testimonial” type movies and releasing them on YouTube, often many times per day. According to the suit, the promoters were paid commissions depending on their ability to raise investor cash. In addition, Joshua Jeppesen, a U.S.-based person, acted as a contact between BitConnect and supporters and represented BitConnect at conferences and promotional events.

They allege that these defendants unlawfully sold unregistered digital asset securities by actively promoting the BitConnect lending program to retail investors, and they will seek to hold accountable those who illegally profit by capitalizing on the public’s interest in digital assets, according to Lara Shalov Mehraban, Associate Regional Director of the SEC’s New York Regional Office.

The SEC’s lawsuit accuses the promoter defendants of breaching federal securities registration regulations and Jeppesen of aiding and abetting BitConnect’s unregistered offer and sale of shares. Injunctive remedies, disgorgement with interest, and civil penalties are sought in the lawsuit.

The SEC’s ongoing investigation

Gwen Licardo of the SEC’s Retail Strategy Task Force, Michael Baker and Pamela Sawhney of the SEC’s Cyber Unit, and Jordan Baker of the SEC’s New York Regional Office lead the continuing investigation. John O. Enright, Ms. Mehraban, and Kristina Littman, Chief of the Cyber Unit, are supervising the case. Jorge Tenreiro, Mark Sylvester, Ms. Licardo, Mr. Baker, and Ms. Sawhney are the attorneys handling the case.

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