Promoting BitConnect Initial Coin Offering (ICO) has landed five individuals in hot waters. The US Securities and Exchange Commission (SEC) has charged five separate individuals for non-compliance with rules while promoting BitConnect ICO that raised a whopping $2billion back in 2017.
The SEC says they were actively promoting an “unregistered security.” While ICOs raising funds by providing investors with ‘utility tokens’ manage to circumvent the regulatory framework, certain tokens failed to comply as they were classified as ‘securities tokens’ – Bitconnect was one of them.
The top financial regulatory authority in the US confirmed that those charged promoted Bitconnect in various capacities and received a commission for the investments which came in through them. It has been reported that one of the ‘promoters’ grabbed as much as $2.6 million in commission.
Representing SEC’s New York office, in a statement to the press, Lara Shalov Mehraban, an associate regional director said that these “defendants unlawfully sold unregistered digital asset securities by actively promoting the BitConnect lending program to retail investors.”
Bitconnect was one of the most successful ICOs back in 2017 when it managed to raise over $2billion. The cryptocurrency exchanges had to shut shop after it was charged with two consecutive cease and desist notices from state authorities. The ICO was declared illegal for offering securities tokens and it was not duly registered with the concerned authorities.