The U.S. Securities and Exchange Commission (SEC) said it will commence action against a group of well-known online “influencers” associated with the now-infamous BitConnect investment scheme. The list includes social media celebrities such as Trevon Brown (aka “Trevon James”), Michael Noble (aka “Michael Crypto”), Craig Grant, Ryan Maasen.
Also charged was Joshua Jeppesen, who the SEC said acted as liaison between BitConnect and its network of promoters. All are based in the United States.
According to the SEC’s complaint, the promoters advertised, offered and sold digital asset securities that should have been registered, and received commissions on their sales as broker-dealers without being registered as such.
“The promoters advertised the merits of investing in BitConnect’s lending program to prospective investors, including by creating ‘testimonial’ style videos and publishing them on YouTube, sometimes multiple times a day.”
Trevon Brown was particularly prominent on YouTube and other social media as a digital asset investor. Posting videos from his computer and from his car while driving, Trevon initially played the part of a naive non-investor who went from living on food stamps to earning over a million dollars after discovering the wonders of Bitcoin. He became an enthusiastic BitConnect promoter soon after and didn’t stop even after BitConnect collapsed and it was clear U.S. regulators were targeting him personally in their investigations.
His image as an everyman and ingenue was contradicted somewhat by his relentless social media activity on most popular platforms, with handle names like “btctre” and “cryptotre.” He describes himself as “founder of our.glass crypto” and has promoted numerous other digital assets, including HEX.
To this day he remains popular with many—his Twitter account still has over 32,100 followers and several expressed their support following the SEC announcement.
“We will seek to hold accountable those who illegally profit by capitalizing on the public’s interest in digital assets,” said Associate Regional Director of the SEC’s New York Regional Office Lara Shalov.
BitConnect shut down its original operation and exchange in January 2018, following accusations it was running a Ponzi scheme. Several governments launched investigations into its business prior to, and after the shutdown.
Following that, another operation known as “Bitconnect X” launched, offering to reimburse BitConnect investors and offering to swap BCC tokens for BCCX assets.
The BitconnectX Twitter account hasn’t posted since October 2018. Its bio reads: “The end of Bitconnect X is Official, but it is just the beginning of something new. We will do what we can to help regain the losses everyone suffered from.”
The original bitconnect.co domain now redirects to a site with the name “Crypto Group” at uk.crptogroupinvest.com, carrying the headline “Crypto is making people rich, and you can become the next millionaire.”
What was BitConnect?
BitConnect launched in 2016 as a digital asset (the BCC coin itself) and as an investment scheme, which allowed its users to “lend,” or “lock in” BCC value in return for interest payouts. The value of BCC was locked to the value of BTC (known simply as “Bitcoin” at the time) and BitConnect’s “trading bot” determined the value of interest payouts, which could be as much as 1% compounded daily.
It functioned using a model similar to many other multi-level marketing schemes, relying on glitzy promotional events, videos promising wealth and luxury lifestyles, and a network of popular promoters to talk about their gains. It was promoted most heavily to aspirational-affluent young people in Asia, particularly Southeast Asia.
Launching as it did at the start of the 2016-17 digital asset bull run, BitConnect had hype that carried the BCC asset from 17 cents at ICO time to US$463 by December 2017, when many other assets also reached their peaks.
From its very beginnings, however, BitConnect was accused of being irresponsible at best and a Ponzi scheme at worst. Critics questioned the network’s ability to continue paying out large interest sums to an ever-growing network of users, unless more and more new investors bought in every day. The U.K. government in November 2017 gave organizers a two-month deadline to prove its legitimacy, and was followed by U.S. states like Texas, North Carolina and Kentucky taking their own actions against the organization soon after.
BitConnect is probably best remembered for promoter Carlos Matos’ enthusiastic and repeated cries of “BitConneeeeeccct!” at a conference in Thailand in October 2017. The video was shared widely by promoters and detractors of the scheme alike, and Matos eventually became an Internet meme symbolizing the empty hype promoting digital asset investments.
Follow CoinGeek’s Crypto Crime Cartel series, which delves into the stream of groups—from BitMEX to Binance, Bitcoin.com, Blockstream, ShapeShift, Coinbase, Ripple and Ethereum—who have co-opted the digital asset revolution and turned the industry into a minefield for naïve (and even experienced) players in the market.
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