Investors have filed a class action complaint against BitConnect one week after its shutdown, seeking compensation.
The class action complaint states that BitConnect issued cryptocurrency tokens that were actually unregistered securities and collected additional funds via a “wide-ranging Ponzi scheme.”
The complaint has been filed by six individuals on their own behalf, as well as that of all other persons who have lost their money by investing into BitConnect. The six plaintiffs stated that their personal losses amounted to $771,000.
It is alleged that BitConnect guaranteed a 40 percent monthly return that it promised to generate by trading the investors’ funds on the cryptocurrency market.
Ultimately, the plaintiffs claim that instead of genuinely generating revenue via cryptocurrency trading, the platform actually used the funds from new investors to meet the expectations of the existing ones.
Launched in February 2016, BitConnect was a cryptocurrency community platform which introduced its own cryptocurrency Bitconnect coin (BCC) in November 2016.
According to data from Coinmarketcap, the BCC has reached the peak of its popularity in Dec. 2017, when its market capitalization hit about $2.7 bln.
Just days later, on Jan. 4, the state of Texas issued a cease and desist order against BitConnect for the selling of unlicensed securities which has led to the crash of the BCC token and the platform’s closure.
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Author: Helen Partz