A law firm is suing BitConnect on behalf of former customers for Ponzi operations and fraud. The lawsuit was filed last month in the United States District Court for the Southern District of Florida.
BitConnect closed crypto exchange and lending platform last month following cease orders from two state security regulators. The company said the orders were making it hard to continue operating. It also cited “continued bad press” and several DDoS attacks on their website. However, they said they will retain the website for the wallet service, news, and educational motives. They said they would proceed with a planned ICO.
The lawsuit says it was a Ponzi scheme. For instance, it deceived customers to buy BitConnect tokens at the promise of getting back returns of as much as 40% per month. BitConnect coin value fell by nearly 90 percent after the notice and is useless now.
The lawsuit is against the company and its U.S. Directors and promoters.
Led by a crypto investing law firm
The lawsuit is led by Silver Miller, a law firm that invests in cryptocurrencies. According to the lawsuit, they violated numerous state and federal securities laws. These include Sections 5, 12(a), 15, and 17(a) of the Securities Act of 1933.
Additionally, violations against customers include engaging in unregistered offering and sale of securities.