The SEC filed a new complaint against Ponzi scheme BitConnect, allegedly a $2 billion scam
The Securities and Exchange Commission (SEC) has filed a new complaint against the now-defunct crypto Ponzi scheme BitConnect, claiming that those behind it conducted a fraudulent and unregistered securities offering totaling $2 billion.
SEC sues BitConnect founder in the latest legal filing
The lawsuit began more than three years after BitConnect shut down. However, the SEC is targeting BitConnect and its founder Satish Kumbhani and promoter Glenn Arcaro and his company Future Money for violating the Securities Exchange Act, which requires companies to sell investment products in the U.S. to register with the SEC.
Earlier this year, the SEC sued three BitConnect promoters who received BCC tokens for attracting new investors to the scheme. In August, defendants Joshua Jeppesen, Michael Noble, and Laura Mascola settled with the SEC for 190 BTC (worth $9.25 million) and $3.5 million in cash. This is the first U.S. action against BitConnect’s management.
— Mikael Pawlo (@mpawlo) September 1, 2021
BitConnect was a prominent cryptocurrency Ponzi scheme that operated between 2016 and 2018. It quickly shut down after intervention from the Texas State Security Board. The defendants allegedly operated a Ponzi scheme, skimming investor funds into their crypto wallets and using fresh money to pay off early investors. And not just a little bit of money. The platform raised 325,000 BTC, then worth $2 billion.
Although BitConnect, like other alleged token scams, has disappeared from popular memory, the SEC has not forgotten. This year, it launched actions against several token projects and Initial Coin Offerings (ICO), then a popular way for crypto projects to raise cash in 2017 and 2018.
Today’s news comes as the SEC expands its regulatory powers to the crypto sector. Furthermore, the SEC has also settled with several other crypto businesses in recent months, including Poloniex, Coinschedule, Loci, and LBRY.
Additionally, the SEC is stuck in an ongoing case with Ripple’s XRP issuer, aiming to beat the regulator in court. Charges against those targets range from outright fraud to lower fees for unregistered securities activity.
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