Bitconnect faces a mounting series of lawsuits and regulatory action following its quick rise and fall as one of the most notorious exit scams in crypto. It’s the blockchain the crypto community loves to hate, first known for its Ponzi scheme as a lending platform offering 1% daily interest. Today, it’s probably most remembered for this famous hype talk by Carlos Matos, featuring memorable phrases including, “Hey hey heeeeeeeeeey”, “What’s-a what’s-a what’s-a what’s-a what’s-a what’s-a what’s-a what’s-a what’s UP, BITCONNEEEEEEEEEEEECT”, and “The WORLD is not anymore the way it used to be”.

Class Action Suits Against Bitconnect

On January 8, 2018, Bitconnect was served a cease and desist letter from the Texas Securities Commissioner for selling unlicensed securities. Over the last few months, American citizens in Florida, Texas, Kentucky, and North Carolina have filed class action lawsuits against Bitconnect, with at least four lawsuits claiming US$771,000 in losses. In a press release, attorney David Miller, who’s representing plaintiffs in the class action suit, 

The Big Shutdown

In January, Bitconnect shut down its exchange platform after receiving two cease and desist notices from North Carolina and Texas, converting all Bitcoin held into its token asset, BCC. The currency, valued at US$300 at the time, nosedived to US$6 following the freeze and to under US$3 following news of the litigation.

Bitconnect YouTubers Also Face Legal Action

A US court has since frozen Bitconnect’s assets, and now some of its promoters are also in hot water. Trevon James, a popular YouTube personality, is being accused of promoting unregistered securities in his videos endorsing Bitconnect. James recently revealed his court date is scheduled for March 16. Another YouTube promoter, “Cryptonick”, has since disappeared, removing all of his Bitconnect related content in the process. Craig Grant, called the “Godfather” of Bitconnect, is also facing a suit over Bitconnect while he continues to create YouTube content, all the while holding more than 300 bitcoins in a Gemini wallet.

Know Your Investments

Bitconnect’s legal battles are far from over, as is the emerging regulation around cryptocurrencies and exchanges. For investors, the Bitconnect case is a reminder to research critically, to look past the promises for real-world use cases and a solid financial structure, and to be wary of pyramid schemes. As this case plays out, it’s likely to become a landmark legal blow to future crypto Ponzi schemes, and hopefully decrease their presence in the crypto marketplace.