In a landmark decision that may impact several countries fighting the rise of cryptocurrencies, including India, a US court ruling clarified that influencers and promoters could be held liable for “peddling shady crypto investments.” .
The 11th Circuit Court of Appeals ruling in the US came in a 2018 case in which some investors filed a class action lawsuit against open-source cryptocurrency BitConnect and its promoters for conducting a Ponzi scheme and persuading them to bid for high returns invest, had submitted.
BitConnect’s promoters told their victims that their crypto would be used by an automated trading bot that would bring in huge profits if they handed over their bitcoin for a period of time.
In September, Glenn Arcaro, a promoter of BitConnect, pleaded guilty to participating in a massive conspiracy to defraud BitConnect investors in the US and abroad, in which investors were fraudulently tricked into investing over $2 billion to invest.
The BitConnect scheme is the largest cryptocurrency fraud scheme ever criminally charged.
Now the 11th Circuit Court of Appeals has ruled in favor of the investors, allowing the case against Arcaro and one of his regional promoters, Ryan Maasen, to continue, reports The Verge.
David Silver, an attorney for the plaintiffs, tweeted late Friday that “the law is clear: advertise on social media, you can and will be held liable.”
“According to the Court of Appeals, the marketers insisted that they could not be held liable because the Securities Act covers sales calls to specific individuals, not communications directed at the general public.”
This is an incredibly important decision that will reverberate for years to come.
“The Securities Act doesn’t give a free pass to online inquiries,” Silver said.
The court found that technology has opened new avenues for both investment and advertising.
“A new means of prompting is no less a prompt. So proud of the 11th Circuit for getting this case right,” Silver tweeted.
The Court of Appeal found that “when the promoters asked people to buy BitConnect coins in online videos, they still prompted them to make subsequent purchases.”
Cryptocurrencies have made criminals richer, and in 2021 criminals held $11 billion worth of funds from known illicit sources, compared to just $3 billion at the end of 2020, a new report revealed. At the end of 2021, stolen funds accounted for 93 percent of all criminal assets, at $9.8 billion.
Darknet market capital comes second at $448 million, followed by scams at $192 million, scam shops at $66 million and ransomware at $30 million, according to blockchain data firm Chainalysis.
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(Only the headline and image of this report may have been edited by Business Standard contributors; the rest of the content is auto-generated from a syndicated feed.)
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