BitConnect, a crypto lending platform, has been sued for over $2 Billion Token Sale by the U.S. Securities and Exchange Commission


A crypto lending platform BitConnect is sued by the U.S. Securities and Exchange Commission for over $2 Billion Token Sale almost three years after its shut down.
The SEC has targetted
not only Satish Kumbhani, BitConnect’s founder, Glenn Arcaro, its promoter, and
his firm Future Money for violating the Securities Exchange Act. According to
this act, any company selling investment-related products in the U.S. is
mandatorily required to register with the SEC.
The SEC has already
sued three BitConnect promoters earlier this year. Those promoters had gotten
BCC tokens for drawing in new financial investors to the plan. In August, the
litigants Joshua Jeppesen, Laura Mascola, and Michael Noble had settled with
the SEC for 190 Bitcoin which is valued at $3.5 million in cash. This is the first
action of the U.S. against BitConnect's administration.
Glenn Arcaro of Los
Angeles was confessed in government court for his investment in the conspiracy. In a parallel action, the U.S.Securities and Exchange Commission has announced civil charges against Arcaro
and 3 others in connection with the same conduct. The sentencing is scheduled
for November 15, 2021, at 9:30 a.m. before Todd W. Robinson, the U.S. District
Judge.
Bitconnect also
announced that it would transfer any left funds in the users' lending wallets
to their BCC wallets at a rate of $363.62 per BCC. The platform's token was
rapidly seen falling to fall in value by a whopping 96% after they had
announced its shut down. On the same day of its announcement, investors wanted
to cash out the BCC in their wallets as fast as they were receiving
it.
How did Bitconnects
get into trouble?
Bitconnect announced
its sudden shutting yesterday. Durning, its bright days, Bitconnect has easily
exceeded the value mark of $400.With its suspicious business model, Bitconnect
promised its investor on its website that it would turn its Bitcoin investment
into a fortune. Bitconnect was acquiring new investors by affiliate marketing
scheme rather than traditional marketing efforts which also attracted the
attention of authorities.
Despite receiving several legal notices to shut its operation, the promoters carried on with their fraudulent operation. Bitconnect tried to dissolve the matter by simply churning out more content, only until yesterday that they announced its immediate shutdown. “we are closing lending service and exchange service while BitConnect.co website will operate for wallet service, news, and educational purposes.”
The SEC lawsuit has
imposed fines, recoup ill-gotten gains, and other relief. BitConnect, founded
in 2016, had created a digital token named as BitConnect Coin that could be
exchanged for the popular cryptocurrency, bitcoin.
Prosecutors accepted
that BitConnect was running a "textbook Ponzi scheme" by paying its
earlier investors with new investor money.
On May 28, the SEC
has sued five other BitConnect promoters.
It has obtained
judgments requiring two promoters, Joshua Jeppesen and Michael Noble.
Jeppesen's fiancee has to pay more than $3.5 million and 190 bitcoin. Other
promoters have not responded to the lawsuit yet or have not been served.

Rushali Das
CBW - External Analyst
INDIA