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 for an undisclosed sum for operating an alleged online investment scam -- a Ponzi scheme -- in the second such lawsuit filed against…
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 for an undisclosed sum for operating an alleged online investment scam — a Ponzi scheme — in the second such lawsuit filed against the lending and 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.
According to the complaint, a copy of which CCN has obtained, the company was targeting Kentucky residents.
“Bitconnect scammed thousands of Kentuckians and hundreds of thousands of Americans out of millions and millions of dollars through a website called bitconnect.co.”
For his part, Paige first invested $100 in November, followed by a $5,010 allocation in December. Today it’s worth a few hundred dollars.
It points to defendant Ryan Maasen of Tulsa, Okla. as the ringleader of the alleged scam, using YouTube videos to promote the company and “convince people to deposit money onto Bitconnect’s website,” which Paige and a host of others did. Massen deposited bitcoin in exchange for fixed returns and a guarantee of the principal amount being paid in full at a later date. Bitconnect was promising fixed returns of as high as 40% monthly and 1% daily irrespective of the cryptocurrency market.
But those promises never materialized. Bitconnect in recent weeks was forced to shutter its trading and investing platform amid a series of regulatory cease-and-desist orders out of Texas and North Carolina. The BCC price suffered, and now Paige is left with nothing but the token that’s not worth the wallet that’s holding it, with the coin having shed 90% of its value.
When Bitconnect closed for “technical difficulties” on Jan. 16, it converted Paige’s holdings to BCC, which at the time was worth $363 each. Interest and principal promises were no longer being honored. When the company announced its closure on a few days later, the BCC coin fell to $11.03.
The lawsuit alleges that it was reasonable for investors to believe Bitconnect’s claim amid the “rise of cryptocurrency trading” in 2017. The plaintiffs were lured by the easy return, which they couldn’t see was too good to be true.
The suit alleges that instead of performing any real business activity, Bitconnect merely “relied
on new money from new users, who were in turn expected to get more new users to produce more
new money,” aka a Ponzi scheme. Ethereum co-founder Vitalik Buterin seems to agree –
To which Buterin responded –
Similar to the first class-action complaint lodged against Bitconnect in the past week, Paige’s suit alleges that “Bitconnect investments are securities” but are not registered as such, therefore any commissions received for the sale of Bitconnect investments are illegal.
Plaintiffs in the case are seeking damages from an alleged breach of contract for “return of principal, interest, attorneys’ fees and other foreseeable damages from the total loss of this investment.”
Paige is also seeking a restraining order against defendants Bitconnect and Maasen for the freezing of assets and the disclosure of a bitcoin wallet address “so their money can be appropriately monitored.”
Featured image from Shutterstock.
Last modified: January 24, 2020 11:16 PM UTC