David C. Silver, an attorney for the investors in the Florida case, told Law360 on Monday that BitConnect was “a classic Ponzi scheme.” “Now that the music has stopped playing, thousands upon thousands find themselves victims of this financial crime,” Silver said. “Make no mistake, this is theft, poor and simple. We will investigate any professionals who worked with this thieves and hold them accountable.”
Law360 (February 5, 2018, 9:44 PM EST) -- A proposed class of investors accusing cryptocurrency marketplace BitConnect of being both a pyramid and Ponzi scheme asked a Florida federal court on Monday for an emergency order freezing assets of the now-shuttered trading and lending platform, saying that such a move is necessary to stop their money from being spent or shunted into another scam.
The temporary restraining order proposed by the investors would also apply to the BitConnect promoters named as defendants in the suit and would come with an order requiring them to disclose their cryptocurrency wallet addresses so their compliance with the asset freeze can be monitored.
“With the known fraudulent tactics of these fraudulent corporations — which have failed to provide any reasonable assurances that the money stolen may still be available — and the inherently ephemeral and unregulated nature of cryptocurrency, the risk of dissipation is both immediate and irreparable,” the investors said in their court filings.
The investors’ suit is one of four proposed class actions to be filed around the country against BitConnect since it announced on Jan. 16 that it was shutting down its lending and exchange platform, citing “continuous bad press,” cyberattacks and cease-and-desist letters from state securities regulators in Texas and North Carolina that had supposedly made it too difficult to continue.
The suits accuse BitConnect of exploiting the hype around cryptocurrencies to dupe investors into using their bitcoin to buy BitConnect Coins, or BCC, which investors were then allegedly supposed to lend back to BitConnect in exchange for returns generated by its secret proprietary trading algorithm.
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