- The US SEC is about to settle with 4 BitConnect promoters.
- The Bitcoin ponzi scheme raised over $2 billion before shutting down.
- Also, the settlements include hefty penalties for each promoter.
The US Securities and Exchange Commission (SEC) is about to settle with four of six promoters associated with the BitConnect ponzi scheme.
In fact, Law360 reports that the settlement terms are only waiting for final approval. The presiding judge, John Koeltl, noted that the agreements just need some minor fixes before he signs off.
Although the finer details of the settlements are as yet unknown, it seems the agreements include fines for the defendants. According to reports, Joshua Heppensen will pay a $3 million fine, his fiancee Laura Mascola will pay $576,000. While Ryan Maasen will pay $526,000. Another defendant, Michael Noble, will pay an undisclosed amount.
To clarify, the four along with two others allegedly promoted BitConnect, a crypto lending platform. The six used testimonial videos in their promotional activities. In addition, they offered and sold unregulated securities, according to the SEC. Based on how the promoters acted, the SEC is alleging that the six acted as broker-dealers.
Also, the promoters allegedly earned a commission for their promotional services. The commissions ranged from 0.2% up to 5%. The SEC reports,
Brown obtained at least $480,000, Grant over $1.3 million, Maasen over $475,000, and Noble over $730,000 as “referral commissions” and “development funds” from promoting and touting investments into BitConnect’s lending program to retail investors.
Notably, the remaining two defendants Trevon Brown and Craig Grant are still negotiating the details of their settlements.
In 2017, BitConnect ran an elaborate ponzi scheme. The platform offered risk-free profits to traders by promising returns as high as 40% based on monetizing bitcoin price volatility. BitConnect offered users loans and trading based on its native token BitConnect Coin. However, these services had to be collateralized using Bitcoin.
When regulators caught wind of the scheme they sent the exchange operators a cease and desist order. At this point, the platform had managed to raise over $2.5 billion from thousands of users.
As a result of the court order, the platform abruptly shut down in January 2018. Platform operators alleged failure to operate due to regulations. Thus, investors could not redeem their BTC collateral. The operators allegedly got away with about $14.5 million in an exit scam. To make matters worse, BitConnect Coin proceeded to crash by over 90%.
Currently, BitConnect is run by community developers who claim to not be connected to the old operators.