Arcaro, Maasen & YouTube dismissed from BitConnect class-action
Claims against BitConnect class-action defendants Glenn Arcaro, Ryan Maasen and YouTube have been dismissed.
Following motions to dismiss securities violations claims citing lack of jurisdiction and failure to state a claim, the court agreed on the grounds that
the mere allegation of a Securities Act violation is not sufficient to confer personal jurisdiction.
The remaining state law claims were also dismissed, as the securities violation claims were seen as “anchor claims”.
Without the securities violation anchor claims, the remaining state claims were deemed to also fall outside of the court’s jurisdiction.
With respect to failure to state a claim, the court ruled the plaintiffs failed
to allege that they purchased securities as a result of Arcaro and Maasen’s solicitations.
This in turn meant the plaintiffs had failed to establish that Arcaro and Massen were sellers of BCC directly responsible for the plaintiff’s losses.
On whether Glenn Arcaro was a “controlling person” within BitConnect, the court ruled there was wasn’t enough information to form a definitive conclusion.
Claims against YouTube in relation to Craig Grant allegedly spending $7000 a week to advertise BitConnect on their platform, were dismissed because the
plaintiffs have not alleged … that they watched any of Grant’s videos or saw any of the advertisements he paid for.
There is thus no direct causal relationship Stamong the defendant, the forum (YouTube), and the litigation.
The plaintiff’s claims also failed against YouTube with respect to personal jurisdiction.
The Communications Decency Act was also brought up as a “catch-all”, as it provides immunity to service providers with respect to liability for third-party user content.
While securities claims against Arcaro, Maasen and YouTube have been dismissed, the court noted that ‘they may yet prevail with respect to other defendants in this action‘.
The problem for the plaintiffs however appears to be getting a response from the remaining defendants.
While summons have been issued as to all of the BitConnect Corporate Defendants and BitConnect Developer Defendants, the docket does not reflect whether any of them have been served, and none have appeared in this action.
Of the seventeen individual BitConnect defendants, four have appeared. Of those four, Arcaro and Maasen are out leaving three standing.
Indian authorities have been rounding up BitConnect ringleaders for some time, including several named class-action defendants (Satish Kumbhani and Divyesh Darji).
US authorities are also known to be investigating BitConnect and its promoters, further complicating service on class-action defendants.
Typically we see US regulators intervene in civil cases that might impact their own investigations. As of yet however neither the SEC or DOJ have shown their hand.
Personally I believe this is due to key persons of interest such as Glenn Arcaro still being on the run.
Looking forward the court has directed the class-action plaintiffs to file a status report regarding service by September 6th.
Plaintiff shall (1) file proof of service indicating those Defendants were timely served, or (2) show good cause supported by specific facts to excuse the failure … and any justification which may exist for an extension of time to serve process on any particular defendant.