SEC Charges Five in Connection with $2B BitConnect Securities Offering

According to a news release issued last Friday, the Securities and Exchange Commission (SEC) sued five men who allegedly promoted a “global unregistered digital asset securities offering” that earned more than $2 billion from retail investors. The Southern District of New York complaint contended that four of the individuals violated registration provisions of the federal securities laws and the other aided and abetted in the unlawful acts. 

The SEC’s complaint explained that from about January 2017 to January 2018, a company called BitConnect, an unincorporated organization that previously registered several now non-existent companies in the United Kingdom, used a network of promoters to market and sell securities in its cryptocurrency “lending program.” In order to publicize the investment opportunity, promoters Trevon Brown, Craig Grant, Ryan Maasen, and Michael Noble advertised the benefits of investing in the program for BitConnect. They reportedly created testimonial-like videos and posted them to YouTube, on some occasions several times per day.

Last week’s filing claimed that the promoters received commissions based on the amount of investor funds they solicited. It also claimed that the promoters were not registered as broker-dealers, nor were the securities registered with the SEC as legally required. The fifth individual charged with aiding and abetting the unregistered offering, Joshua Jeppesen, reportedly served as a liaison between BitConnect and promoters that represented the company at conferences and promotional events.

According to the SEC’s press release, Lara Shalov Mehraban, Associate Regional Director of SEC’s New York Regional Office, remarked on the decision to prosecute. “We will seek to hold accountable those who illegally profit by capitalizing on the public’s interest in digital assets,” she said in a statement. 

The complaint seeks injunctive relief, disgorgement of ill-gotten gains, and civil penalties.