BitConnect Lawsuit: Bitcoin Trading Platfrom Sued By Six Victims

The controversial and recently defunct cryptocurrency trading platform BitConnect has been hit with a class action lawsuit from former users who claim the company stole more than $770,000 from them.

Six former investors in BitConnect filed the suit with a U.S. district court in West Palm Beach, Florida Wednesday. The group is seeking repayment of funds lost in BitConnect, which is widely believed to have been a Ponzi scheme.

In addition to suing the company, the lawsuit also names a number of affiliate marketers who promoted BitConnect and may have profited by getting others to sign up for the service. The lawsuit specifically names Glenn Arcaro, Trevon Brown, Ryan Hildreth, Craig Grant and CryptoNick—a 17-year-old investor who has built a significant following on social media by talking about cryptocurrencies.

The lawsuit , which opens with lyrics from “Welcome to Wonderland” from the Broadway musical “Wonderland,” claims that BitConnect and its promoters made many false promises to investors that ended up costing people a significant amount of money.

“Sure enough the crypto-Wonderland created by BitConnect was too good to be real,” the lawsuit reads. “As the business’ closure in January 2018 revealed a Ponzi scheme, numerous securities laws violations, and thousands upon thousands of investors who lost [more than] 90 percent of their holdings.”

The filing seeks damages for all “class members,” which is defined as any BitConnect investor—with the exception of those named as defendants and other individuals involved in affiliate marketing programs for the investing platform.

The plaintiffs in the action lawsuit claim to have lost between $11,500 to $200,000 investing in BitConnect and “seek compensatory and equitable relief rescinding their investments in BitConnect and restoring them the assets and funds they were fraudulently induced into investing.”

Earlier this month, BitConnect announced that it would cease operation of its lending and exchange programs after a number of complaints had been levied against the company, accusing it of being a fraudulent service.

BitConnect’s now defunct lending system allowed users to take their existing Bitcoin, convert it to a token called BitConnect Coin, and receive interest payments on earnings from that token. The returns were not guaranteed but BitConnect often promised the system produced interest of around one percent per day in its promotional material.

The promise of consistent returns from the platform, which traded in its own token, resulted in some skepticism from users and observers. Some even accused BitConnect of operating a ponzi scheme .

BitConnect also drew the ire of regulators who viewed the platform as a potential scam. The Secretary of State for North Carolina issued a temporary cease and desist order against BitConnect last week for selling securities in the state without permission. Last year, the United Kingdom’s Registrar of Companies revealed the British Companies House sent a warning to BitConnect that threatened to shut down the site’s entire operation.