BitConnect in deep water again as investors file lawsuit

Investors of the now defunct BitConnect are demanding compensation for their losses. The plaintiffs are claiming that they were promised profits but BitConnect failed to meet its promises. BitConnect shut down on January 17th, but it seems like its troubles are yet to be over.
Even though the exchange halted all business operations on January 17th, its troubles haven’t ended. Investors who lost money to BitConnect have filed a class action lawsuit against the defunct exchange. The investors demand compensation for their losses, which amount to a total of $771,000. The lawsuit has been filed by six individuals and have claimed that the exchange promised 40% monthly returns. However, the exchange not only failed to provide the returns, but it also sank their money.

The plaintiffs explained that the exchange resorted to paying their profits through the money gathered from new investors instead of actual cryptocurrency trading, alleging that Bitconnect was nothing more than a Ponzi scheme. Just a few weeks ago, a judge ordered BitConnect to cease and desist its operations when the exchange was found to be selling unlicensed securities.

The following were the comments of Texas State Securities Board regarding BitConnect:
The Securities Commissioner found that the BitConnect investments are securities, but were not registered as required by the Texas Securities Act and State Securities Board Rules and Regulations. In addition, the company is not registered to sell securities in Texas.”

BitConnect wasn’t a small exchange either. Launched in February 2016, it steadily grew to become a significant party in the crypto market. BitConnect launched their own BitConnect Coin (BCC) in November 2016. BCC enjoyed reasonable success and its market capitalization hit an all-time high of $2.7 billion in December 2017. After the court’s cease and desist order on January 4th, BCC tumbled, and the exchange had to eventually close operations on January 17th.

The latest law suit is the last nail on BitConnect’s coffin. Whether the investors get their money back or not is uncertain, but the lawsuit should be lesson for those who believe that they can commit fraud and not not be punished for it.