If your first introduction to cryptocurrency was via John Oliver’s Mar. 12, 2018 “Last Week Tonight” episode, you remember Bitconnect well.
Oliver’s far-from-flattering report used footage of one of the project’s big events as its source material for the overhyped and — at the time — financially disastrous cryptocurrency industry.
Three years later, the Securities and Exchange Commission has finally taken formal action, suing five people for violating securities law by selling the Bitconnect token, which the agency calls an unregistered security.
Bitconnect was, at the time, a failed and suspect project that has since been called a probable $2 billion Ponzi scheme by the likes of Galaxy Digital’s Mike Novogratz, Ethereum creator Vitalik Buterin and Litecoin creator Charlie Lee.
Using emojis for ducks, Lee said: “I follow this rule of thumb: ‘If it looks like a [duck], walks like a [duck], and quacks like a [duck], then it's a ponzi.’"
Ducks In a Row
On May 28, the agency sued promoters Trevon Brown (a.k.a. Trevon James), Craig Grant, Ryan Maasen and Michael Noble (a.k.a. Michael Crypto) with illegal securities sales. Joshua Jeppesen, who the agency said, “served as a liaison between BitConnect and promoters and represented BitConnect at conferences and promotional events,” was charged with aiding and abetting those sales.
"We allege that these defendants unlawfully sold unregistered digital asset securities by actively promoting the BitConnect lending program to retail investors," said Lara Shalov Mehraban, the SEC’s associate regional director for New York. "We will seek to hold accountable those who illegally profit by capitalizing on the public's interest in digital assets."
The SEC is seeking to force them to “disgorge” — turn over — any earnings, plus interest, as well as pay fines.
After commenting “Just when I thought life was getting a little bland,” in the first of several tweets, our.glass Crypto founder James pushed back, saying “Real crypto OG’s will rally around me. The real ones that know the truth, and what happened from day 1.”