Class Action Suit Against BitConnect
January 26, 2018
It is only a week since BitConnect announced closing its lending site and exchange which caused its cryptocurrency rate slumping. So the first class action was not long in coming.
The suit was filed to Florida’s Southern District Court which charges the company with issuing cryptocurrency tokens that actually are unregistered securities for fundraising thus establishing a large-scale “Ponzi scheme”.
The document states launched BitConnect projects like lending and exchange platform demanded investments for buying its cryptocurrency. The suit also mentions the company promising up to 40% profit a month or 3000% a year. The complainants say, BitConnect has broken the US Securities Law as this is regarded as issuing of unregistered securities.
“This investment option involves profiting from Bitconnect trading bot and volatility software. You will receive daily profit based on your investment option. Upon investment term completion, you will receive your capital back to take out from the Bitconnect lending platform or optionally reinvest back in lending platform to continue receiving daily profit”, the suit citing the message from the company website.
The complainants suspicions are that BitConnect functioned as Ponzi scheme instead of using investments in accordance with the statement above and planned attracting additional funds from new investors to repay them to the previous ones.
Six persons sued on behalf of all investors and account holders who transferred crypto and fiat funds as investments to BitConnect account. The document says the total loss of these six persons to be $771 000.
Let us recall that BitConnect claimed closing lending platform and exchange a week ago. As the company, this step was forced by orders of illegal activity cessation made by Texas and North Carolina regulatory bodies. Amid all this the BCC rate fell by more than 95%.