SEC says group illegally raised $2B in crypto offering

FILE - In this July 30, 2013 file photos, then Commodity Futures Trading Commission (CFTC) Chairman Gary Gensler testifies on Capitol Hill in Washington. The Senate has approved President Joe Bidens choice of Gensler to head the Securities and Exchange Commission, signaling an emphasis on investor protection for the Wall Street watchdog agency after a deregulatory stretch during the Trump administration. (AP Photo/J. Scott Applewhite) (J. Scott Applewhite, Copyright 2021 The Associated Press. All rights reserved.)

WASHINGTON – Federal regulators have accused a group of people of promoting a securities offering tied to digital currency that raised over $2 billion from retail investors without being properly registered.

The Securities and Exchange Commission filed the civil lawsuit Friday in federal court in Manhattan. It alleges that an outfit called BitConnect used a network of promoters to sell the securities without registering the offering with the SEC, or registering themselves, as brokers as required by law.

The promoters touted the benefits of investing in BitConnect’s program, creating testimonial-style videos and publishing them on YouTube, sometimes multiple times a day, according to the regulators. The promoters allegedly received commissions based on their success in bringing in money from investors.

The suit is the latest in a series of enforcement actions involving digital assets that the SEC has taken starting in 2013. The actions against cryptocurrency issuers, brokers and exchanges have come as digital currencies like Bitcoin have exploded in popularity in recent years amid extreme price volatility. The SEC has collected an estimated $1.77 billion in penalties in settlements of cases, according to financial experts.

Digital currencies aren’t tied to a bank or government and allow users to spend money anonymously. The Biden administration is looking at tightening regulation of Bitcoin and other cryptocurrencies, with an eye to preventing the growing incidence of ransomware attacks that demand payment in the currencies.