Bitconnect Faces Lawsuit for Operating "Wide-Reaching Ponzi Scheme"

Bitconnect is facing litigation from six individuals accusing the company of operating a Ponzi scheme in addition to numerous violations of securities laws. The six plaintiffs collectively invested approximately $771,000 USD into Bitconnect, and are seeking recourse following the sudden removal of the company’s lending platform that immediately led to a more than 90% loss in the value of Bitconnect tokens.

Also Read: Not Content Scamming $1.5 Billion, Bitconnect Wants Another $500 Million for ICO

Bitconnect Receives Class-Action Lawsuit

The complaint has been filed by Charles Wildes, Francisco Doria, Aric Harod, Akiva Katz, James Gurry, and Ronald Nelson with the Southern District Court of Florida, and is made on behalf of all Bitconnect customers, in addition to the aforementioned plaintiffs individually.

The suit has been brought against all three corporate entities comprising the Bitconnect company, in addition to defendants “Glenn Arcaro, Trevon Brown a/k/a Trevon James, Ryan Hildreth, Craig Grant, and Cryptonick” – who are accused of aggressively recruiting new investors into the Ponzi scheme using social media.

Bitconnect Accused of Running “Wide-Reaching Ponzi Scheme”

The preliminary statement of the complaint describes Bitconnect as having raised “millions of dollars’ worth of cryptocurrency” through “a trading platform and lending program fraudulently promoted and operated by” the defendants.

The complaint states that “Bitconnect guaranteed investors up to a forty percent total return per month on their investments, following a four-tier investment system based on the sum of the initial deposit.” Investors were “promised a one percent return on investment on a daily basis, which Bitconnect purported would be generated by its own proprietary trading bot and volatility software,” which was to be paid out “regardless of market performance or the fluctuating price of cryptocurrency.” An investment of just one thousand dollars would grow to generate a $50 million return within three years of compounding daily interest, the company is reported to have shilled.

The plaintiffs state that Bitconnect’s former $2.5 billion market capitalization was “built through the use of fraudulent means,” in particular “a wide-reaching Ponzi scheme that defrauded investors, made a mockery of state and federal securities laws, and employed an army of social media mercenaries who were paid to bring more unsuspecting victims into the fraud.”

Bitconnect’s Lending and Exchange Platform Shuts Down

During early January, Bitconnect boasted a market capitalization of more than $2.5 billion. After receiving cease-and-desist notifications from regulators in Texas and North Carolina and an increase in accusations of comprising a Ponzi scam, Bitconnect suddenly announced that it would shut its lending and exchange platform – leaving many Bitconnect token-holders unable to liquidate their assets, the value of which rapidly depreciated by over $95%.

Despite the turmoil, BCC tokens are refusing to die, with many investors seeking to offload their BCC tokens in exchange for BCCX – a token soon to be launched by the company through an initial coin offering. As a consequence, somehow, BCC has a market capitalization of more than $100 million dollars, and has witnessed nearly $5.5 million worth of trading during the last 24 hours, according to Coinmarketcap.

Do you think that the plaintiffs will be successful in suing Bitconnect? Share your thoughts in the comment section below!

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