Yesterday, a lawsuit was filled against BitConnect by the Texas Securities Authority. The State of Texas accuses the platform of a registration failure and a fraud. Another case of problems arising from the confluence of institutionalized jurisdiction and decentralized technology.
As it’s already reported, BitConnect is a riskier venture for investors. The promise of BitConnect sounded tempting at first. If you invest a minimum amount of $ 100, the promised returns of 120%. The consensus of the BitConnect Coin is based on a combination of Proof of Work and Proof of Stake. With an investment of 100 to 1,000 US dollars, the money remains locked for a period of one year.
In addition, the developers promoted with trading bots, which should then invest the money – automated and profit-oriented. Another incentive is the referral program, where you recruit new members.
BitConnect failed to register!
First of all, the company is not registered in the state of Texas, which is why all previous activities took place outside the legal framework. Neither investments in BitConnect nor the operators of the platform were legitimized by the state. Recruitment of new members by recruiters should also have been registered with the state.
BitConnect has to face the charge of fraud!
In addition to the charge of non existent registration, the crypto investment platform is accused of promoting false promises. Above all, it is about the denial of essential information. Among other things, they failed to disclose the identities of their members and the location of their company. Furthermore, the plaintiffs complained that neither the BitConnect Coin developers nor the holders or number of existing coins were disclosed.
Misleading the public
It can be seen from the above points that relevant factors were concealed. Another charge is misleading investors. The fact that the coins of BitConnect are always in competition with other crypto currencies, their course can not be guaranteed under any circumstances. Another problem that can mislead investors according to the indictment is the fact that the acceptance of the coins can not be guaranteed either.
Erroneous representations and technical difficulties
The moldy cherry on this unsavory accusation pie are technical mistakes in programming as well as typographical mistakes. The operators of BitConnect can not guarantee the technical functionality of the promised content. Since investors would have to rely on the accuracy of BitConnect, these and the above points are a deliberate misleading of customers.
The final point is the classification of the offer as securities. The promise of commissions for referral and related investment should have been registered with the State Securities Board in Texas.
Preliminary hiring of the service
BitConnect will have to cease its services until the necessary registration, correction of risk factors and correction of the misinformation with the State of Texas is ultimately regulated.
The case of BitConnect once again points to the problems with ICOs and crypto currencies. First and foremost, both investors and developers scent quick profits in the absence of state guidelines. As in the case of ATB Coin, the main problem is the classification as securities and their lack of registration, which companies have to answer for.
Eventually, one can expect a signal effect from cases like these. Who wants to start similar projects in the future, can orient themselves, at least in Texas, to these guidelines. Investors can also profit by using the mentioned charges as a checklist. Agreements at the transnational level would be ideal, as the clash of centralized regulation and decentralized technology is always causing problems.
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