Judgement day has come for BitConnect: The Southern District of Florida handed the shifty Bitcoin investment lending platform its first class action lawsuit yesterday, alleging the company swindled the plaintiffs for a sum exceeding $770,000.
The case, brought by six former investors, names several BitConnect branches registered in the UK. More interestingly though, it also goes after local promoters who blatantly hyped the investment scheme on YouTube and other social media channels.
Among others, the lawsuit lists BitConnect affiliate marketer Glenn Arcaro, who holds a director position in the company according to the British Companies House registrar. It also names Trevon Brown (better known as Trevon James around the web), Ryan Hildreth, Craig Grant, CryptoNick (filed as John Doe) and several other unnamed promoters.
The document bizarrely opens with a reference to the song Welcome to Wonderland from the Broadway play Wonderland.
“Sure enough the crypto-Wonderland created by BitConnect was too good to be real,” the document reads. “As the business’ closure in January 2018 revealed a Ponzi scheme, numerous securities laws violations, and thousands upon thousands of investors who lost [more than] 90 percent of their holdings.”
According to figures in the filing, the plaintiffs lost sums ranging from $11,500 to $200,000. “Plaintiffs and Class Members seek compensatory and equitable relief rescinding their investments in BitConnect and restoring them the assets and funds they were fraudulently induced into investing,” the case insists.
For context, the case describes “Class Members” as any BitConnect investors with the exception of the defendants and any individuals commercially involved in the defendants’ affiliate marketing efforts. All investors that fit this criteria can join the class action against the company.
In a curious turn of events, some of the BitConnect promoters named in the lawsuit – including Arcaro and Hildreth – went on to wipe their entire YouTube channels when BitConnect received its first cease and desist orders from the Texas Securities Board and the North Carolina Securities Division.
Still, suspicious netizens were thoughtful enough to archive some of the promo footage before the marketers had a chance to pull it from their channels. Independent cryptocurrency sleuth Bitfinex’ed has since provided us with some of Arcaro’s deleted videos. You can access all of them from this link.
Meanwhile, BitConnect continues to shill its equally shady BitconnectX initial coin offering (ICO) which remains active. Indeed, its army of promoters is currently targeting naive investors in Indonesia and other parts of Asia, encouraging them to back the new ICO.
Following the ominous shut down of its lending and exchange platform last week, the company revealed it will now continue to operate for “wallet service, news and educational purposes.” But as we broke it down in our exposé, this is merely another sketchy rebranding move on BitConnect’s side.
Despite the numerous red flags, the company continues to rake in new investments for its ICO. In the meantime, the BitConnect controversy has attracted so much attention, popular YouTube comedians are now meme-ing on it.
The filing indicates the plaintiffs are seeking “trial by jury in this action of all issues so triable.” Law firm Silver Miller has made the full filing available on their website – those interested can peruse it here.
Published January 25, 2018 — 11:30 UTC