BitConnect securities fraud cease and desist issued in Texas
While the SEC drags its feet, Texas continues to lead the charge against MLM cryptocurrency fraud in the US.
The latest from the Texas Securities Board is an emergency cease desist issued against BitConnect.
Issued on January 4th, the cease and desist identifies BitConnect’s ICO lending scheme, staking program and upcoming BitConnectX ICO as unregistered securities offerings.
BehindMLM came to the same conclusion in our Bitconnect Review (published April, 2017), going one step further and identifying BitConnect as a Ponzi scheme.
The Texas Securities Board accuses BitConnect of securities fraud, by way of the company not being registered to offer securities in Texas.
Doing so would require BitConnect to provide evidence it uses external revenue to pay affiliate lending ROIs, something the company has failed to provide to investors since launch.
In addition to not registering to offer securities, the Securities Board accuses BitConnect of fraud in relation to failing to
- identify its principals (who owns and is running the company)
- provide a physical address and identifying its principal place of business
- disclose its assets and liabilities, or financial information about the business
- disclose who developed BitConnected Coins, including the number of BitConnect Coins owned by these persons or entities, and the number of BitConnect Coins owned by the owners of BitConnect itself and
- disclose the identity and qualification of the person(s) who developed BitConnect’s purported trading bot
The Securities Board also takes BitConnect to task for misrepresenting the ICO lending investment opportunity:
BitConnect is representing the BitConnect Lending Program is “a safe way to earn a high rate of return on your investment without having to undergo a significant amount of risk,” wish is a misrepresentation of a relevant fact because BitConnect acknowledges significant risks associated with virtual currencies.
With respect to BitConnect’s staking program, the Securities Board points out BitConnect
intentionally fail(s) to disclose … the source of funds that will be used to pay investors interest at a rate of up to 120% per year.
Concluding that BitConnect is ‘engaging in fraud in connection with the offer for sale of securities’ and deceiving the public, the company is ordered to immediately cease and desist from
- offering for sale any security in Texas until the security is registered with the Securities Commissioner
- acting as a securities dealer in Texas until BitConnect is registered with the Securities Commissioner
- engaging in any fraud in connection with the offer for sale of any security in Texas
BitConnect has thirty-one days to respond to the Securities Board’s cease and desist, failing which BitConnect will be certified illegal in the state of Texas.
Affiliates who continue to promote BitConnect in Texas risk a fine of $5000 and two years imprisonment.
This is the second cease and desist issued by Texas in as many weeks. On December 20th a similar emergency cease and desist was issued against USI-Tech.
As with USI-Tech, it is assumed that the SEC is also investigating BitConnect at a federal level.
BitConnect and USI-Tech are currently two of the largest Ponzi schemes operating in the MLM cryptocurrency niche.
Update 5th January 2018 – A top US based BitConnect affiliate, purportedly with over half a million dollars in his backoffice, has declared the Texas Securities Board “idiots” and instructed Texas BitConnect affiliates on how to circumvent the issued cease and desist.
So people can’t promote bitconnect physically in texas anymore? Ok? LOL
Texas is asking for disclosures of information that will never be released to anyone in order to keep operating.
Bitconnect is borderless, invisible, “dark web” magic and will most likely never disappear. They hold a lot of power and influence in the online anonymous space.
Good luck governments.
BitConnect operates across the regular internet and most definitely has a money and paper trail for authorities to follow.
What, you seriously think the SEC, FBI, DHS, USSS and related authorities aren’t investigating the MLM crypto niche? These departments cooperate with foreign governments, as we saw with the Liberty Reserve bust a few years back.
I get there’s a lot of first-time scammers in the MLM crypto space but c’mon. Y’all knew this was coming.
People who promote it or advocate it, such as you, can easily be caught, and go to jail while the REAL masterminds, who take the money and run, get away scot free.
Remember Profitable Sunrise a while back? People were prosecuted all over for it, accounts seized across multiple nations and continents, but they never caught the mastermind, as apparently nobody had seen his face.
They leave people like you holding the bag, so to speak.
At the time of publication Alexa estimate the US is the largest source of traffic to the BitConnect website (19%).
Round up some of the American YouTube donkey shills too (Crypto Nick, Trevon James et al.), and that’s a hell of a lot of leads for authorities to pore over.
If this is the case, then Texas I am asking you to outlaw Bitcoin and any other alt coin investment. Absolutely outrageous!
Bitcoin and legitimate altcoins differ to BitConnect and ICO lending scams in that they’re not companies that solicit investment on the promise of a daily ROI.
Oz,
I respect you my friend, but the word promise is a stretch from the truth I believe.
Bitconnect has never promised daily returns. They indicate and state the possibility of a return and use the terms (up to). But I do agree that promoters or the like should not promise or guarantee returns in any fashion.
Oh shutup. The BitConnect website advertises daily ROI bonuses plus “up to 40% a month”.
Your pseudo-compliance nonsense isn’t fooling anyone.
I certainly thought I was being quite kind and factual from my statement. Did I misspeak? I thought I wrote exactly…
They indicate and state the possibility of a return and use the terms (up to).
I even agreed with you somewhat. Anyway, I’m not the enemy here. Good Luck in your war sir!
No, they advertise “interest” of up to 40% a month plus fixed daily ROI amounts.
Go and look at the site yourself before wasting my time. Ponzi pseudo-compliance has never stopped a regulator from shutting a scam down.
The “but we didn’t promise anything” BS was last used by Traffic Monsoon.
Didn’t work out for them, they had an injunction taken out by the SEC and owner Charles Scoville can be observed slowly losing his mind daily on Facebook.
Is bitconnect a ponzi scheme? maybe. Will it go dark and take everyone’s remaining investments? possibly.
Should people be responsible and do their own due diligence before investing in anything? of course.
Should people make sure and invest no more than they can lose when it comes to any risky investments? yes.
With all that said, I have no affiliates under me, have never advertised bitconnect, but I did invest $5010 back on November 25th.
So far I’ve made about $2500. But it’s an amount I can lose and it wouldn’t surprise me if it was gone tomorrow. But if I can make money on it then all the better.
So you’re a shameless scammer…. um yay? Here’s a cookie.
If you say so.
But it’s my own money, it’s my own choice to invest, I understand the risks of total loss. I haven’t even considered talking anyone in to investing under me. I think I’m doing a bad job as a scammer.
You don’t have the right to participate in financial fraud.
Whether you personally recruit new investors or not is irrelevant, you are still stealing from those who join after you regardless.
It’s OK. BCC did a good job. Just delete the development in Texas.
BCC more than 1 year never cheat the investor. I m sure. We support BCC always.
That’s how a Ponzi scheme works. By the time you stop getting paid it’s too late.
Offering unregistered securities is illegal practically the world over. The rest of the world just hasn’t caught up to the MLM crypto scam niche yet.
it seems bitconnect posted an affiliate backoffice notification yesterday stating they wont be doing business in texas anymore.
facebook.com/photo.php?fbid=10215269496155046&set=p.10215269496155046&type=3&theater
the note says texas affiliates who have active lending ongoing will receive returns as usual. how can they still pay out an ROI in texas under a cease& desist order?
wont be long before bitconnect runs away from the US entirely. it’s just a matter of time and affiliates should just withdraw their investments as fast as they can.