A group of investors sued BitConnect ponzi scheme, alleging that the cryptocurrency exchange platform was a “wide-reaching Ponzi scheme” and seeking potentially hundreds of millions of dollars in damages. Another class-action lawsuit, along with a restraining order, has been filed against UK-based Bitconnect, this one in Kentucky.
Brian Paige is suing Bitconnect ponzi scheme for an undisclosed sum for operating an alleged online investment scam — a Ponzi scheme — in the second such lawsuit filed against the lending and cryptocurrency exchange platform in a week. At least 100 members have joined the class action, reflecting an “amount in controversy” that surpasses $5 million.
The latest class-action lawsuit was filed in the US District Court for Kentucky, Louisville Division on Jan. 29. Paige is being represented by Jasper Ward of Jones Ward PLC in Louisville, Kentucky and Abigale Rhodes Green of an injury law firm that bears her name.
BitConnect’s backers have been hard to locate. The company site doesn’t list contact details or provide information about its team. Nor did the firm issue a white paper describing its business model, standard practice for most coin startups. But people poured money in it anyway.
There has been no response to messages submitted through the platform’s website seeking comment on the lawsuit. Company records in the U.K. don’t include a phone number.BitConnect a cryptocurrency exchange platform and a long-suspected Ponzi scheme was shut down earlier this month, leading to a major crash for its native token, BCC, which dropped from the $400 range to under $10, causing huge losses to its members.
For those who are unfamiliar with it, BitConnect essentially operated like the notorious HYIP programs, popular over a decade ago, where investors are lured by promises of huge returns in very short amounts of time. BitConnect was offering a ridiculous 40% return per month along with bonuses.
While such programs usually payout initial members to gain confidence, the scheme really thrives on referrals (offering lucrative commissions), since old members are paid with new money as long as the cycle continues. Things are further helped by the option of “compounding” your earnings, where members are encouraged to retain their profits within the platform for even bigger gains.