While everyone’s eyes are on the Ripple’s case, the SEC continues to enforce the U.S. securities law and bring charges against individuals and companies, who violate such law. In May, the SEC filed a complaint
with the U.S. District Court Southern District of New York against BitConnect and five promoters for conducting an unregistered offering and sale of securities.
According to the complaint, Trevor Brown, Craig Grant, Joshua Jeppesen, Ryan Maasen, and Michael Noble acted as promoters and together with BitConnect raised approximately 2 billion dollars from investments into the BitConnect “lending program.” In exchange, the promoters received a percentage of the invested funds each of them raised. At the same time, none of these promoters were registered with the SEC by broker-dealers in violation of the U.S. securities law.
BitConnect promised investors as high as 40% monthly return from the company’s Bitcoin trading operations. In addition, BitConnect offered referral commissions to existing investors who referred new investors to the lending program. The referral commissions ranged between 0.2% and 7% depending on the referrer’s level. Many may remember a very aggressive marketing campaign of BitConnect filled with a large number of testimonials from investors with referral links to the BitConnect lending program.
For their promotional efforts, five promoters listed in the SEC’s complaint together received over 5.5 million dollars. The SEC's complaint charges the promoter defendants with violating the registration provisions of the federal securities laws, and Jeppesen with aiding and abetting BitConnect's unregistered offer and sale of securities. The complaint seeks injunctive relief, disgorgement plus interest, and civil penalties.