A Louisville resident has filed a lawsuit against a firm based in the UK in a federal court, claiming he was swindled by a cryptocurrency scam investment scheme organized by the company.
The case filed in U.S District Court in the Western District of Kentucky is not the first lawsuit by investors determined to recover money paid to BitConnect, the now-defunct cryptocurrency Ponzi scheme shut down earlier this month by authorities in Texas and North Carolina via a cease and desist order.
According to Courier Journal, there are at least six other investors who have filed a similar federal suit against the firm.
The plaintiff, Brian Paige, alleged he lost over $5,000 in the Ponzi scheme and is now seeking unspecified damages, a court trial, and class action status.
Paige’s lawyer, Jasper Ward noted that the total number of Kentucky residents caught in BitConnect’s web is still unknown, but at least $5 million was lost. The suit alleged that BitConnect promised its participants returns of up to 120 percent per annum if they invested bitcoin in the firm’s lending and exchange platform.
Oklahoma-based BitConnect promoter, Ryan Maasen, Bitconnect International PLC, Bitconnect LTD, and Bitconnect Trading LTD, were all mentioned in the suit. Paige claimed he got in touch with Maasen to find out from him if the gains are for real. Maasen answered in the affirmative, citing the exponential rise of bitcoin, “Just look at how much bitcoin has grown since it started. Fractions of a penny to now over $7K…crypto is incredible!”‘ Maasen wrote, as stated in the lawsuit.
Some crypto experts have long suspected that BitConnect’s claims of being a bitcoin mining and lending platform were false since the firm always used new users’ funds to settle existing participants.
Regulators in Texas and North Carolina accused BitConnect of selling unregistered securities and fraudulent practices. Paige claimed to have started with $100 initially back in November 2017, and he then pumped in another $5,010 in December, before the sudden shutdown of the website.
On January 17, 2018, BTCManager reported that the BitConnect team announced they were shutting down their lending and exchange service.
“We are closing the lending operation immediately with the release of all outstanding loans. With the release of your entire active loan in the lending wallet, we are transferring all your lending wallet balance to your BitConnect wallet balance at 363.62 USD. This rate has been calculated based on last 15 days averages of the closing price registered on coinmarketcap.com,” the company wrote.
The suit also alleges that the number one BitConnect promoter, Maasen, who created numerous YouTube videos promoting the scam cryptocurrency when things were rosy, has jumped ship and is now selling another altcoin.
“The rise of cryptocurrency has made it a breeding ground for fraud, and we hope cases like this put people on notice that if they try to scam consumers, they will have to deal with the consequences. We look forward to holding the defendants accountable for scamming people in Kentucky and across the country,” wrote Jasper Ward, Mr. Paige’s lawyer, in an email.
It’s a good thing all the bad actors in the crypto space are crumbling one after the other. The Securities and Exchange Commission, the CFTC and many other regulatory bodies around the globe are actively weeding out the shaft from the seeds. It is only a matter of time before these scammers ultimately die off.