The Securities and Exchange Commission (SEC) has filed a civil lawsuit against five people accused of promoting BitConnect, a now-defunct crypto Ponzi scheme.
The regulator contends the platform's "lending program" constituted a $2 billion unregistered securities offering since the firm wasn't a registered broker-dealer. Bitconnect first debuted in 2016 and shuttered its primary lending platform in early 2018 amid allegations of fraud and warnings from regulators. The FBI publicly sought out potential BitConnect victims in 2019.
Now, the SEC is holding Trevon Brown, Craig Grant, Ryan Maasen and Michael Noble to account for their alleged advertisement of the merits of the platform's lending program. They created YouTube videos touting their success using the platform to solicit investor funds, per the SEC's complaint, and received commissions for their efforts.
Joshua Jeppesen is also a defendant in the case for his alleged role as a liaison between BitConnect and its promoters. Jeppesen represented BitConnect at events.
"The SEC's complaint charges the promoter defendants with violating the registration provisions of the federal securities laws, and Jeppesen with aiding and abetting BitConnect's unregistered offer and sale of securities," said the regulator in a statement.
The lawsuit was filed in the United States District Court for the Southern District of New York. The agency is seeking injunctive relief, disgorgement plus interest and civil penalties.
"We allege that these defendants unlawfully sold unregistered digital asset securities by actively promoting the BitConnect lending program to retail investors," Lara Shalov Mehraban, Associate Regional Director of the SEC's New York Regional Office, said in a statement. "We will seek to hold accountable those who illegally profit by capitalizing on the public's interest in digital assets."