Appellate court decision allows Bitconnect class action to proceed
The 11th Circuit Court of Appeals has ruled that victims of the Bitconnect Ponzi scheme can proceed with a class action suit by reversing a previous ruling that prohibited such a case.
Bitconnect is the endlessly memed ICO from 2017 that collapsed in January, 2018. Appellate courts are superior courts that are used to review previously tried cases so the ruling may be reversed or confirmed.
The alleged victims may now move forward with a class action case against BitConnect (BCC) and its promoters Glenn Arcaro, Ryan Maasen, Trevon James, Ryan HiIdreth, and Craig Grant. There is no word yet on whether the complainants will proceed with the case.
The original complainants filed suit in order to be compensated for damages from being defrauded by BitConnect and its promoters. The complaint says promoters “made a mockery of state and federal securities laws.”
Law360 wrote on Feb. 22 that the defendants claimed in the Southern District of Florida that since marketing for the project was done using online mass communications platforms, they could not be held liable for securities fraud.
The defendants successfully argued that there could “only be liability when a seller directs solicitations to particular prospective buyers.” By using online social media platforms, the promoters argued that they had not directly solicited the cryptocurrency to buyers. Without that direct solicitation, they argued there was no securities fraud.
However, the Circuit Court decided to reverse the lower court’s decision to accept that argument since there is no precedent of the Securities Act of 1933 preventing online videos from being used in fraud charges.
Judge Britt C. Grant wrote for the court’s panel on Feb. 18:
The Circuit Court’s panel called the
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