Police in Tokyo have arrested eight individuals in connection with a BTC pyramid scheme alleged to have swindled as much as $68.4 million from its victims, according to local press reports.
According to the Asahi Shimbun report, authorities confirmed the men have been taken into custody in connection with an investment company known as ‘Sener,’ which had been running seminars led by foreign speakers.
A video footage leaked online from these seminars showed the participants were offered monthly returns ranging from 3-20% on their investment, and were expected to invite other investors into the scheme in order to maximise their returns.
The suspects are alleged to have collected funds from unsuspecting investors in cash and BTC, covering about 6,000 individual victims over the duration of the scam. As a result, a separate group lawsuit has been filed on behalf of some 73 victims seeking $3.2 million in damages.
Local media are reporting that six of those detained have admitted to their involvement in the pyramid scheme, while two remain in denial of their role in the scam.
Police have suggested that the use of BTC was an attempt to avoid legal enforcement action, given its current ‘gray zone’ status under Japanese law. Cryptocurrencies are not yet considered securities in Japan, thus they fall largely outside of the remit of regulators such as the Financial Services Agency (FSA).
The scam is only the latest of its kind to target BTC fraud, with authorities around the world actively pursuing a number of high profile cases against similar cons and scams.
Japan is regarded as a crypto-friendly jurisdiction, despite significant hacks at some of its most high profile cryptocurrency exchanges, including Zaif and Coincheck.
In October, the country’s FSA gave self-regulating status to the crypto industry, appointing industry body JVCEA to oversee self regulation within the sector. The FSA current issues licenses to crypto businesses such as exchanges seeking to operate within the jurisdiction.
The arrests show the increasingly hardline response being taken by authorities in tackling the blight of BTC scams, which remain all-too-prevalent, regardless of the ongoing weakness in BTC markets.
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A newly consolidated lawsuit has been filed against BitConnect, several months after several cases have been brought forth against the company’s alleged fraudulent pyramid scheme at the beginning of 2018. BitConnect has been considered as the crypto sector’s biggest scam to date, following its false promotions and offering unregulated securities in connection with its initial coin offering (ICO).
Aggrieved by the loss of value in their crypto holdings, BitConnect investors rushed to court to seek redress. They sought to be indemnified by the now defunct startup, while looking to securities laws to support their allegations of fraud.
Last week, a new consolidated class action complaint has been filed in the U.S. District Court for the Southern District of Florida, CoinDesk reported. David Miller, of the Silver Miller law firm, told the news outlet that the new lawsuit not only consolidated the previous cases, but also named more BitConnect owners and promoters—Divyesh Darji and Trevon James—who weren’t included in the earlier lawsuits.
As reported by Coingeek in July, YouTube was also added to the suit for their ncegligence in promoting the fraudulent corporation. Google-owned YouTube was charged with negligence in connection with its alleged failure to protect or warn its users that BitConnect was a scam. The video streaming site reportedly published more than 70,000 hours of promotional videos, which were viewed more than 58 million times. According to documents filed in the Southern District Court of Florida, Google-owned YouTube ‘was aware or ought to have been aware that BCC promoters were using the channel to promote and lure unsuspecting investors in the U.S. and abroad into the fraudulent Ponzi scheme.
Following further lifting of Bitconnect’s corporate veil, a new lawsuit has been consolidated to include its Indian Head- Divyesh Darji and promoter Trevon James. They have been specifically named for the first time in the ongoing suits against the corporation. They are accused of launching an illegal pyramid scheme to swindle investors while passing it off as another crypto-startup.
Others named in the consolidated suit filed last Thursday in the U.S. District Court for the Southern District of Florida include: BitcConnect Public Limited, BitConnect International PLC, BitConnect Ltd, BitConnect Trading Ltd., and close to 40 people affiliated with the Ponzi scheme. The new lawsuit cites 22 various legal violations by the company.
The company has since been dissolved through court action after cease and desist orders were issued against it in Texas and North Carolina.
The suit seeks restitution and compensatory damages for victims. Silver Miller law firm has been appointed as the class action attorneys and David Miller as the lead counsel in the company’s defense.
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