Bitconnect Customers Sue Company for Allegedly Operating Ponzi Scheme
Bitconnect is not enjoying a very good period of time. The company is actually facing a lawsuit now, filed by a total of six customers, on allegations of operating a Ponzi scheme. The lawsuit also accused the company of violating securities laws.
The six customers, who invested a total of $771,000 into the company, filed the lawsuit after suffering a loss of more than 90% in the value of Bitconnect tokens. The loss was caused by the unexpected removal of the company's lending platform. The lawsuit was filed by the six individuals in the Southern District Court of Florida on behalf of all company customers.
Six investors sue company after sudden removal of lending platform
The lawsuit targeted the three corporate entities that form Bitconnect, as well as the individuals who allegedly recruited investors. These six individuals were accused of using aggressive tactics to recruit new investors into the alleged Ponzi scheme on social media. The lawsuit claimed that the scheme was widespread.
According to the lawsuit, because of the Ponzi scheme, the company has been able to get a lot of cryptocurrencies, worth some millions of dollars by using a fraudulent "trading platform and lending program." The lawsuit said that:
“Bitconnect guaranteed investors up to a forty percent total return per month on their investments, following a four-tier investment system based on the sum of the initial deposit.”
The lawsuit also indicated that at the same time, investors were promised returns on their investments on a daily basis, which the company said will be given to investors no matter the market performance or the price of cryptocurrencies.
The lawsuit concluded that Bitconnect was a "wide-reaching Ponzi scheme" which only ended up defrauding investors. The company announced its decision to shut down its platform earlier this month, after allegations of Ponzi scam and several cease-and-desist notifications from regulators in states such as Texas and North Carolina.
