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SEC charges promoters of BitConnect, the Ponzi scheme that raised over $2 billion

SEC charges promoters of BitConnect, the Ponzi scheme that raised over $2 billion
Justinas
Baltrusaitis
4 months ago
3 mins read

The Securities and Exchange Commission announced today that it has filed an action against five individuals alleging that they promoted a global unregistered digital asset securities offering that raised over $2 billion from retail investors.

According to the SEC’s complaint, filed in the United States District Court for the Southern District of New York, from approximately January 2017 to January 2018, BitConnect, one of the most famous Ponzi schemes of all time, used a network of promoters, including U.S.-based Trevon Brown (a.k.a. Trevon James), Craig Grant, Ryan Maasen, and Michael Noble (a.k.a. Michael Crypto) to market and sell securities in its “lending program.” 

The SEC’s complaint alleges that these promoters offered and sold the securities without registering the securities offering with the Commission, and without being registered as broker-dealers with the Commission, as required by the federal securities laws.  

The promoters advertised the merits of investing in BitConnect’s lending program to prospective investors, including by creating “testimonial” style videos and publishing them on YouTube, sometimes multiple times a day. According to the complaint, the promoters received commissions based on their success in soliciting investor funds.

Another U.S.-based individual, Joshua Jeppesen, served as a liaison between BitConnect and promoters and represented BitConnect at conferences and promotional events.

Will seek to look for those responsible

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

The SEC’s complaint charges the promoter defendants with violating the registration provisions of the federal securities laws, and Jeppesen with aiding and abetting BitConnect’s unregistered offer and sale of securities.  The complaint seeks injunctive relief, disgorgement plus interest, and civil penalties.

The SEC’s ongoing investigation is being conducted by 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. 

Briefly about BitConnect

BitConnect gained prominence in 2018 as an open-source crypto project promising high yields. However, the founders were accused of running a Ponzi scheme based on the multilevel marketing structure and the high payouts of 1% daily compounded interest.

At the time, BitConnect Coin ranked among the top 20 cryptocurrencies but collapsed after investors lost confidence in the project leading to a near-complete loss of value.

Related video: BitConnect Ceremony – Carlos The Meme

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Justinas Baltrusaitis
Author

Justin crafts insightful data-driven stories on finance, banking, and digital assets. His reports were cited by many influential outlets globally like Forbes, Financial Times, CNBC, Bloomberg, Business Insider, Nasdaq.com, Investing.com, Reuters, among others.