Bitconnect faces a mounting series of lawsuits and regulatory action following it’s quick rise and fall as one of the most notorious exit scams in crypto. It’s the blockchain the crypto community loves to hate, first known for its Ponzi scheme as a lending platform offering 1% daily interest. Today, it’s probably most recognized for this famous hype talk by Carlos Matos, featuring memorable phrases including, “Hey hey heeeeeeeeeey”, “What’s-a what’s-a what’s-a what’s-a what’s-a what’s-a what’s-a what’s-a what’s UP, BITCONNEEEEEEEEEEEECT”, and “The WORLD is not anymore the way it used to be”.
CLASS ACTION SUITS AGAINST BITCONNECT
On January 8th, 2018, Bitconnect was served a cease and desist letter from the Texas Securities Commissioner for selling unlicensed securities. Over the last few months, American citizens Florida, Texas, Kentucky, and North Carolina have filed class action lawsuits against Bitconnect, with at least four lawsuits totaling $771,000 in losses. In a press release, Attorney David Miller, representing plaintiffs in the class action suit is inviting US Bitconnect investors to join the suit as outlined in this complaint document.
THE BIG SHUTDOWN
In January, Bitconnect shut down its exchange platform after two cease and desist notices from North Carolina and Texas, converting all Bitcoin held into its token asset, BCC. The currency valued at $300 at the time, nosedived to $6 following the freeze and under $3 following news of the litigation.
BITCONNECT YOUTUBERS ALSO FACE LEGAL ACTION
The US court has since frozen Bitconnects assets, and now some of its promoters are also in hot water. Trevon James, a popular YouTube personality, is being accused of promoting unregistered securities in his videos endorsing Bitconnect. James recently revealed his court date is scheduled for March 16th. Another YouTube promoter, “Cryptonick” has since disappeared, removing all of his Bitconnect related content in the process. Craig Grant, called the “Godfather” of Bitconnect, is also facing suit over Bitconnect while he continues to create YouTube content all the while holding more than 300 bitcoins sitting in a Gemini wallet.
KNOW YOUR INVESTMENTS
Bitconnect’s legal battles are far from over, and neither is the emerging regulation around cryptocurrencies and exchanges. For investors, the Bitconnect case is a reminder to research critically, looking past the promises for real-world use cases and a solid financial structure, and being wary of pyramid schemes. As this case continues, it’s likely to become a landmark legal precedent against future crypto Ponzi schemes, and hopefully decrease their presence in the crypto market.