SEC Charges U.S. Promoters of $2 Billion Global Crypto Lending Securities Offering
On May 28, 2021, the Securities and Exchange Commission (the “SEC”) announced filing an action against five individuals alleging that they promoted a global unregistered digital asset securities offering that raised over $2 billion from retail investors.
According to the SEC’s complaint, filed in the United States District Court for the Southern District of New York, from approximately January 2017 to January 2018, BitConnect used a network of promoters, including U.S.-based Trevon Brown (a.k.a. Trevon James), Craig Grant, Ryan Maasen, and Michael Noble (a.k.a. Michael Crypto) to market and sell securities in its “lending program.”
The SEC’s complaint alleges that these promoters offered and sold the securities without registering the securities offering with the Commission and without being registered as broker-dealers with the Commission, as required by the federal securities laws.
The promoters advertised the merits of investing in BitConnect’s lending program to prospective investors, including by creating “testimonial” style videos and publishing them on YouTube, sometimes multiple times a day.
According to the complaint, the promoters received commissions based on their success in soliciting investor funds. Brown obtained at least $480,000, Grant over $1.3 million, Maasen over $475,000, and Noble over $730,000 as “referral commissions” and “development funds” from promoting and touting investments into BitConnect’s lending program to retail investors.
Another U.S.-based individual, Joshua Jeppesen, served as a liaison between BitConnect and promoters and represented BitConnect at conferences and promotional events. By aiding and abetting BitConnect’s unregistered offers and sales of its lending program investments, Jeppesen obtained over $2.6 million, of which he transferred over $500,000 to Laura Mascola, his fiancée, who is named as a relief defendant in the Complaint.
The SEC’s complaint charges the promoter defendants with violating the registration provisions of the federal securities laws and Jeppesen with aiding and abetting BitConnect’s unregistered offer and sale of securities. The complaint seeks injunctive relief, disgorgement plus interest, and civil penalties.
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