The SEC announced today that it has filed an action against five individuals, alleging that they promoted the cryptocurrency Bitconnect that raised over $2 billion from retail investors.
BitConnect used a network of promoters to sell the securities without registering them
The agency alleged that, from January 2017 to January 2018, BitConnect used a network of promoters to sell the securities without registering them, as required by federal securities laws. The promoters advertised to potential investors through YouTube videos.
What was Bitconnect?
The company, which caught many people their attention in the cryptocurrency scene with an initial coin offering (ICO) in late December 2016, quickly created a position as one of 2017’s best-performing currencies on CoinMarketCap. In fact, during its heyday, BitConnect boasted a market cap of over $2.6 billion.
Bitconnect was suspected of being a Ponzi scheme because of its multilevel marketing structure and impossibly high payouts. The tactic, which the promoters employed across multiple channels and social media platforms, was showing potential users’ screenshots of the impressive “profits” BitConnect has brought them.
The platform at some point ended its services abruptly and left the remaining investors behind them with huge losses.