Bitconnect collapsed in 2018 after state regulators in Texas and North Carolina filed cease-and-desist letters against its loan and exchange platform.
The US Securities and Exchange Commission filed charges against five individuals for their alleged involvement in the Bitconnect cryptography platform that collapsed in 2018.
According to the SEC complaint, filed with the United States District Court for the Southern District of New York, from about January 2017 to January 2018, Bitconnect used a network of prosecutors to offer and sell more than $ 2 billion in securities without registering the offer with the SEC, and without being registered as a broker, as required by federal securities law.
“We allege that these defendants illegally sold unregistered digital asset securities by actively promoting the Bitconnect lending program to retail investors,” said Lara Shalov Mehraban, associate regional director in the Office of the SEC in New York. “We will seek to hold accountable those who illegally profit by capitalizing on public interest in digital assets.”
Bitconnect collapsed in 2018 after state regulators in Texas and North Carolina filed cease-and-desist letters against its loan and exchange platform.
The SEC complaint charges US prosecutors including Trevon Brown (aka Trevon James), Craig Grant, Ryan Maasen and Michael Noble (aka Michael Crypto) for violating the registration provisions of federal securities laws. The complaint also accuses Joshua Jeppesen of the United States of helping and encouraging the offer and sale of Bitconnect's securities.
Prosecutors praised the benefits of investing in Bitconnect's loan program for potential investors, including using testimonial-style videos and posting them on YouTube, the SEC said in its statement. According to the complaint, prosecutors received commissions based on their success in soliciting funds.
The action seeks injunctive relief, restitution plus interest and civil penalties.
After the complaint was made public, Brown tweeted "I just became a villain again".
Welp, I just became a villain again.
— TrevonJames.eth 🟢 (@TrVon) May 28, 2021
Although no criminal complaints have been filed, the FBI has been investigating Bitconnect for the past three years. Brown said in March 2018 that he had spoken to FBI agents, and the federal investigator posted a notice in 2019 asking investors to contact him.
A criminal division representative from the Justice Department's New York Southern District office said that no criminal charges were brought forward today.
Project promoters were also arrested in other countries: Indian police arrested prosecutor Divyesh Darji in 2018, while Australian authorities filed lawsuits against John Bigatton last year.