The Securities and Exchange Commission (SEC) of the United States has begun legal action against five people who were advertising the now-defunct cryptocurrency exchange BitConnect.
According to reports, the SEC has filed a lawsuit alleging that the defendants assisted in the marketing and sale of securities without first registering them with the agency. Their marketing efforts brought in more than $2 billion from regular investors.
The SEC claims that between January 2017 and January 2018, the promoters marketed BitConnect's "loan service" by publishing a series of YouTube testimonials. They posted the testimonial films numerous times a day on occasion. Following that, the promoters were given a commission for any money raised from investors. According to reports, one of the accused made almost $2.6 million.
On May 28, the SEC issued a news statement using their Twitter account. The claims were detailed in the announcement, as were the names of the defendants.
Associate Regional Director of the SEC's New York Regional Office, Lara Shalov Mehraban, was reported as saying:
“We allege that these defendants offered unregistered digital asset securities to retail investors by extensively marketing the BitConnect loan program. We will attempt to punish those who benefit illegally by exploiting the public's interest in digital assets accountable.”
The SEC has charged four of the people with breaching the federal securities laws' registration obligations. Meanwhile, the fifth guy was charged with aiding and abetting BitConnect's unregistered offer and sale of securities, according to the Commission's complaint.
In 2018, BitConnect ceased operations as an exchange due to suspicions of fraud.
Other crypto-related cases before the SEC
In addition, the Commission is still embroiled in a legal battle with Ripple Labs. They claim that business CEO Brad Garlinghouse and co-founder Christian Larsen engaged in a fraudulent securities offering.
According to sources, the SEC has acquired the ability to examine additional discovery information from Ripple's overseas regulators on May 21. This was the consequence of a dispute that started in April, when Ripple wrote to Judge Sarah Netburn, demanding that she halt the SEC from attempting to obtain this information. According to the letter, the SEC was contacting its foreign regulators as a form of intimidation.
Judge Netburn, on the other hand, finally decided in favor of the SEC. There was no evidence that “the SEC issued its Requests in ill faith,” she said.
The defendants' request to seal exhibits has been the subject of recent developments in SEC vs. Ripple. The SEC had filed an opposition to the request, according to James K. Filan, a former federal prosecutor. Mr. Filan, who has frequently commented on the litigation on Twitter, said the SEC was aware of the high level of public interest in the matter. He also mentioned the attendance figures for the April 6 and April 30 telephone discovery conferences.
Mr. Filan quickly responded with another tweet, this time on Ripple's resistance to the SEC's motion for a new discovery conference.
The post continued, "SEC also just filed a response to Ripple's Opposition to the SEC's request for a discovery conference." “The answer was filed under seal, much like the SEC's original motion, so we won't know what this is about until the sealing issue is resolved.”
