- The SEC settled with three people involved in now-closed crypto exchange BitConnect’s lending scheme.
- The three paid a total of $3.5 million and 190 in bitcoin, but did not admit or deny the allegations.
- In May, the SEC sued promoters for BitConnect, which it said raised over $2 billion via unregistered digital asset securities.
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Three people with links to BitConnect have paid more than $3.5 million and 190 bitcoin to settle a regulatory suit alleging they helped raise more than $2 billion from retail investors in an unregistered digital-asset securities offering.
Michael Noble, also known as “Michael Crypto” and Joshua Jeppesen promoted and sold the securities in breach of federal laws, the Securities and Exchange Commission said Thursday. Laura Mascola received proceeds from the BitConnect scheme, it said.
In a complaint afiled in May, the Securities and Exchange Commission said crypto exchange BitConnect had used a network of promoters to sell securities in a “lending program” in 2017. They used testimonial YouTube videos and other means to promote the scheme to retail investors, and were paid a percentage commission on the invested funds they landed, according to the SEC.
“We allege that these defendants unlawfully sold unregistered digital asset securities by actively promoting the BitConnect lending program to retail investors,” Lara Shalov Mehraban, a director in SEC’s New York office, said in a statement at the time.
Crypto exchange BitConnect told investors that it would trade with their funds and pass the resulting profits back to them, promising returns of up to 40% a month. It closed in January 2018 after being targeted by regulators.
Noble and Jeppersen were two of the five defendants named in the SEC action. Noble was charged with breaking the registration requirements of federal securities laws, while Jeppersen was charged with aiding and abetting BitConnect’s unregistered sale and offer of securities. The SEC alleged Jeppersen had made $2.6 million from the scheme, and that he had transferred $500,000 of that to Mascola, his fiancee.
Noble, Jeppersen and Mascola neither admitted nor denied the charges. Jeppersen’s share of the settlement payment is the biggest, at just over $3 million and 190 bitcoin (worth around $8.9 million, according to Coingecko data). He was ordered to turn over access to his bitcoin wallet so that authorities could obtain the coins.
In May of this year, SEC chairman Gary Gensler said that the authority would crack down on bad actors in the crypto sphere and must be prepared to file actions against such individuals and organisations.
“We need to do whatever we can to ensure that bad actors aren’t playing with working families’ savings and that the rules are enforced aggressively and consistently,” he said at the time.