The US Securities and Exchange Commission (SEC) charged five individuals for promoting the global unregistered digital asset securities offering, BitConnect, that raised over $2 billion from retail investors between January 2017 to January 2018.
BitConnect organized a global network of promoters through referral commissioners and used them to sell securities in its “lending program” without registering the securities and themselves as broker-dealers with the Commission as required by federal security laws, the SEC said on Friday.
The agency alleged Trevon Brown, Michael Noble, Crag Grant, and Ryan Maasen, among the promoters advertising to prospective investors through YouTube videos. Joshua Jeppesen, who represented BitConnect at conferences and acted as a liaison between the company and promoters, is also charged by the agency.
In its charges, the SEC said BitConnect told investors that it would use their funds to trade in, profit from the volatility, and promised to pay investors the profits. Reportedly, BitConnect promised as much as 40% per month.
“We will seek to hold accountable those who illegally profit by capitalizing on the public’s interest in digital assets,” said Lara Shalov Mehraban, Associate Regional Director of SEC’s New York Regional Office.
The SEC’s complaint charges the promoter defendants with violating the registration provisions of the federal securities laws and seeks injunctive relief, disgorgement plus interest, and civil penalties.