The American SEC has reportedly filed lawsuits against as many as five people over the charges of promoting the lending program offered by BitConnect, which halted its lending operations following allegations of involvement in illicit activities as well as warnings from the government regulators.
The press release from the US market regulator stated that the individuals accused had helped the crypto company raise more than two billion dollars from retail investors in an illegal crypto asset. In the ints statement, the SEC further claimed that these defendants acted as unregistered brokers without submitting the securities with the commission.
As per the press release issued by the regulator, the fraudulent activities included testimonial-style videos that were uploaded to numerous social media platforms to justify the offering by BitConnect. Moreover, the fifth individual is accused of aiding and abetting the illegal offering as a liaison between the promoters and the company.
Lara Shalov Mehraban, the SEC’s regional director of New York, said in a statement,
We allege that these defendants unlawfully sold unregistered digital asset securities by actively promoting the BitConnect lending program to retail investors. We will seek to hold accountable those who illegally profit by capitalizing on the public’s interest in digital assets.
BitConnet’s History With Regulators
Founded in 2016, the company rose to fame when BitConnect leveraged a trading bot and offered its investors high returns. A few months down the lane, the regulatory authorities in the United Kingdom asked the company to prove its legitimacy. Two years later, the company started to halt its offerings and operations amidst increasing pressure from the regulatory bodies in the United States.
Its native token BitConnect Coin, which once surged to $500, went down as much as ninety percent. Besides that, the government authorities in the US had described the company as a fraudulent scheme, and within weeks after these comments, the firm’s assets were frozen after a temporary restraining order.
With the mainstream adaptation of the crypto assets in the American business space, the SEC has now turned its attention towards regulating the new currency. Currently, the regulator has filed a lawsuit against Ripple over the allegations of offering unregistered securities.