Ponzi scheme Bitconnect (BCC) was shut down its cryptocurrency exchange and lending operation after regulators from Texas and North Carolina issued a cease and desist order against it on January 16, 2018.
In May 28, the U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against 5 people for allegedly promoting BitConnect digital asset securities without proper registration, raising over $2 billion from retail investors.
To conduct its offer and sale of securities, BitConnect told investors it would deploy investor funds to trade in and profit from the volatility of Bitcoin. In return, BitConnect promised to pay investors the resulting profits, which BitConnect promised could be as high as approximately 40% per month. BitConnect also offered referral commissions to existing investors who referred new investors to the lending program.
The agency alleged Trevon Brown (a.k.a. Trevon James), Craig Grant, Ryan Maasen, and Michael Noblewere (a.k.a. Michael Crypto) among the promoters advertising to prospective investors through YouTube videos.
“Brown obtained at least $480,000, Grant over $1.3 million, Maasen over $475,000, and Noble over $730,000 as “referral commissions” and “development funds” from promoting and touting investments into BitConnect’s lending program to retail investors,” according to SEC.
For each new loan that Brown, Grant, Maasen, or Noble brought in, BitConnect paid the respective promoter a percentage of that new investment as “referral commissions.” The referral commissions initially ranged between 0.2% and 7% and later ranged between 2% and a maximum of 5%.
A fifth defendant, Joshua Jeppesen, was charged with aiding and abetting BitConnect’s unregistered offer of securities by serving as a liaison between BitConnect and the promoters, while representing BitConnect at conferences and promotional events.
By aiding and abetting BitConnect’s unregistered offers and sales of its lending program investments, Jeppesen obtained over $2.6 million, of which he transferred over $500,000 to Mascola, his fiancée.
Promotors of the project have been arrested in other countries as well, including Indian citizens Satish Kumbhani, Mahendra Chaudhari and Divyesh Darji.
In October 2020, another alleged promoter of BitConnect, this time Australian John Bigatton, was charged with offering unlicensed financial services and five other counts related to his involvement. Unrelated to the BitConnect charges, Bigatton’s wife disappeared several months after BitConnect collapsed.
Carlos Matos
Carlos Matos, perhaps the best-known figure related to BitConnect, was not part of its development and merely engaged in PR activities on others’ behalf. Matos has since stated he was unaware BitConnect was a ponzi scheme and that he also lost money — a total of $25,610 — as a result of investing in it.
Read more:
- Former BitConnect Australian National Promoter Anthony Bigatton Faces Up To 10 Years In Prison
- Following Two Years Of Mostly Inaction, A Florida Judge Has Dismissed The BitConnect Victim Class-Action Lawsuit