Not surprisingly, the infamous BitConnect is now facing a class action lawsuit in the Southern District of Florida, according to which six plaintiffs are claiming over $770,000 in losses.
BitConnect, the 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.
The lawsuit, which is made available by the Silver Miller law firm, names six individuals as the plaintiffs and lists BitConnect International PLC, BitConnect Ltd and BitConnect Trading Ltd among the defendants.
Interestingly, the complaint also lists Glenn Arcaro, Trevon Brown aka Trevon James, Craig Grant, Ryan Hildreth and CryptoNick (as John Doe No.1), since they were vocal promoters of BitConnect.
While promoters like Glenn Arcaro and Ryan Hildreth deleted their BitConnect promoting videos, The Next Web managed to get a link to some of the archived content.
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.
Ultimately, with sufficient hype and a major pool of investments, such programs tend to crash and disappear, burning investors, particularly those who join near the end.
With BitConnect however, the company is still continuing its operations and is even going ahead with a new ICO. Meanwhile, its token, BCC, which is worth almost nothing now, is still trading around $14.
This lawsuit should be interesting to follow, particularly when it comes to the Youtube promoters who earned majorly in referral commissions by sending their viewers to sign up for BitConnect. You can read the full filing here.