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The SEC Officially Press Charges Against BitConnect, its Founder, and Top US Promoter

Years after putting it’s sevice on halt, the saga with BitConnect takes another turn as the SEC has filed an action against the founder and some of the promoters. The Commission has alleged that they have swiped more than $2 billion from retail investors through an unregistered offering of digital assets.

The SEC Files Charges Against BitConnect Founder

Launched in early 2016, BitConnect promoted itself as a platform with a highly advanced trading bot that urged users to deposit various cryptocurrencies to earn extraordinary high returns. Although that sounds too good to be true, the platform actually gathered billions of dollars worth of digital assets, and its own crypto (BCC) found a home in the top ten coins by market cap for a while.

However, it all started to crumble in late 2017 when several US state agencies issued cease and desist orders. As such, BitConnect shut down its exchange and lending operation in January 2018.

More than three years later, though, the shadow of the scheme remains, and the top US securities regulator has gone after the platform itself, the founder Satish Kumbhani, and the top US promoter and his affiliated company.

The SEC has alleged all parties that they have defrauded retail investors out of around $2 billion through “a global fraudulent and unregistered offering of investments into a program involving digital assets.”

The Commission’s complaint reads that BitConnect promised to use its “volatility software trading bot,” which employs users’ funds to generate “exorbitantly” high returns (1% daily). However, all parties involved with the project failed to do so – instead, they transferred the funds to personal wallets and used them for their own benefit.

“We allege that these defendants stole billions of dollars from retail investors around the world by exploiting their interest in digital assets. We will aggressively pursue and hold accountable those who engage in misconduct in the digital asset space.” – commented Lara Mehraban – Associate Regional Director of the SEC’s New York Regional Office.

What’s Next?

The SEC has charged the defendants with violating the antifraud and registration provisions of the federal securities laws. The complaint has requested injunctive relief, disgorgement plus interest, and civil penalties.

The Department of Justice already announced that Glenn Arcaro – the top US promoter of BitConnect in the US – has pleaded guilty to the criminal charges. However, the statement didn’t specify what would be his punishment.

CryptoPotato reported recently another development on this front in which the SEC reached a settlement with three BitConnect promoters for over $12 million in BTC and fiat.