US SEC Charges Five Individuals Over $2 Billion BitConnect Promotion

The United States Securities and Exchange Commission (SEC) has recently sued five individuals who had allegedly promoted an unregistered digital asset offering, raising more than $2 billion from retail investors globally.

In an official press release, the SEC noted that from January 2017 to January 2018, BitConnect, a crypto platform that closed down in 2018, used a network of social media promoters to offer securities to a global audience.

These promoters, including U.S.-based Trevon Brown (a.k.a. Trevon James), Craig Grant, Ryan Maasen, and Michael Noble (a.k.a. Michael Crypto), had helped BitConnect to sell over $2 billion worth of securities without registering under the SEC as proposed by the federal securities law.

The SEC complaint pointed out that these promoters were given commissions based on the number of investors they had driven to buy the digital asset securities.

Therefore, to ensure that they succeed, they would create several “testimonial” videos praising the benefits of investing in BitConnect’s lending program and posting those videos on YouTube, numerous times in a day.

Speaking on the case, the associate regional director of SEC’s New York Regional Office, Lara Shalov said,

“We allege that these defendants unlawfully sold unregistered digital asset securities by actively promoting the BitConnect lending program to retail investors. We will seek to hold accountable those who illegally profit by capitalizing on the public’s interest in digital assets.”

The SEC charges the promoters with violating the registration provisions of the federal securities laws, and Joshua Jeppesen, a US-based individual who served as a liaison between BitConnect and the promoters, with aiding and abetting BitConnect’s unregistered offer and sale of securities.  

The SEC’s complaint seeks injunctive relief, disgorgement plus interest, and several other civil penalties.

BitConnect’s Ultimate Collapse

BitConnect was a popular crypto investing and lending platform that was later revealed to be a massive cryptocurrency Ponzi scheme.

The platform collapsed in January 2018, shortly after it was served emergency cease-and-desist letters from the Securities Commissioner of the state of Texas.

SEC Ongoing Unregistered Securities Case

This is not the first time that the SEC is charging an entity for conducting unregistered securities sales.

Earlier in December last year, the financial regulator had charged Ripple for conducting unauthorized securities sales involving its native cryptocurrency, XRP.