BitConnect Slapped with Another Cease and Desist LetterJan 12, 2018 at 14:21
BitConnect has faced yet again another legal trouble, this time with the North Carolina Secretary of State’s office.
The North Carolina Securities Division has issued an order to temporarily suspend BitConnect’s operations within the state, just a few days after getting the same letter from Texas.
The letter, dated January 9, demanded the company to temporarily stop trading and selling illegal, unregistered securities, which is in violation of the State Securities Act.
The letter was served a day before the planned launch of BitConnect’s ICO, BitConnect Coin.
A Crytpo Ponzi Scheme
The company has suffered a bad reputation in cryptocurrency circles, as many investors— including Ethereum founder Vitalik Buterin and Litecoin founder Charlie Lee—labeled the platform a ponzi scheme in the form of digital currency.
Based in the UK, Bitconnect works by trading in Bitcoins (BTC) for BitConnect coins. Investors will then receive daily profit from the platform’s trading bot and volatility software, the company said on its website.
The State office said BitConnect offers investment programs with returns derived from a secret trading system, a material information it fails to disclose to its investors.
Authorities also found BitConnect to be encouraging investors to act as unregistered salesmen by selling unregistered securities, which is in violation of the State Securities Act.
Under the law, investments that involve earnings from cryptocurrency trading systems should be regulated while entities offering securities to state residents should likewise be registered with the state’s securities division.