The Australian Securities and Investment Commission, popularly known as ASIC, is a self-regulatory organization of the Australian government. It holds the position of the national corporate regulator.
ASIC’s basic function is to monitor corporate and financial services, enforce laws and regulations to safeguard the Australian creditors, investors, and consumers. Being an independent authority, it has always been powerful and effective. The legislation implemented in 2019 further strengthened the civil and criminal penalties for misconduct in the financial sector.
The self-regulatory body has been following an on-the-move approach in its crackdown against scams in the financial sector, especially the crypto industry. Since the inception of the first cryptocurrency, Bitcoin, there have been numerous cases of scam and fraud in the crypto industry. One of the most recent frauds in the sector took place in 2016 and 2017. It was carried out by the infamous company, ‘BitConnect’.
When the scam got exposed, many courts and financial authorities around the world started to ban the company and began taking action on individuals involved with the company. So, here, we explore more about the company, the deceitful tactics it used to exploit, and rip crypto investors, and the people involved in promoting the Ponzi scheme.
Background of the BitConnect Fraud
BitConnect was an open-source cryptocurrency-based trading and investment platform. It claimed to be a self-regulatory financial company. It was associated with the Ponzi scheme or the high-yield investment program, in 2016 and 2017. It was released in 2016 and the BitConnect coin intended to engender funds for the maintenance of the software of the platform.
The platform’s developers aimed to enable users to obtain interest payments by lending the value of the BitConnect coin. It became a lending platform for users to trade Bitcoin for BitConnect coin and locked in the immediate value (or, its value on the spot) of the coin over a fixed period, and earned interest which was calculated daily. Now, the interest payouts were calculated by a ‘trading bot’. This was the most dubitable aspect of it all.
Due to the powerful and strategic multi-level marketing policy of the platform, the BitConnect coin made history when it became one of the fastest-growing cryptos in the entire market, touching almost $500 in December 2017 from its ICO price of only $0.17. However, sometime later, regulatory bodies and experts began perceiving and recognizing BitConnect as a Ponzi scheme.
The creators of the platform used the funds generated to promote their coin through various means. This, along with its high-interest payments, which got compounded daily, the value of the BitConnect coin fluctuated extensively.
The scheme offered by the platform was “too good to be true” for not only numerous crypto experts but also for authorities, and governments around the world. The UK government was the first authority to issue a two-month notice to the company on November 7, 2017, soliciting them to prove their legitimacy.
The Texas State Securities Board, on January 3, 2018, called the investment program offered by the company a ‘Ponzi scheme’ and issued a ‘cease and desist’ against the company. The official edict also cited fallacious statements and users’ earning transparency. The financial authority, along with the North Carolina Secretary of State Securities Division, prohibited the company from selling its securities in the states.
After these respective orders, the price of its coin slumped by 92% and on January 17, the developers announced the closure of the company. The platform also declared that it’d refund all loans to its users.
Even after two years since the shutdown of the fictitious company and its fraudulent scheme, the crackdown continues. Many people associated with the platform, or the scheme, in any way, are getting banned by financial regulatory bodies. Some officials like the BitConnect promoter, Trevon James, and India Head, Divyesh Darji, even got arrested for their involvement in the scam.
The Most Recent Prohibition- Australian Promoter Faces Ban
The ASIC has recently banned John Louis Anthony Bigatton, a New South Wales resident, who served as the ‘Australian National Representative’ for the notorious, multi-billion Ponzi scheme, BitConnect. The ban prohibits Bigatton from providing pecuniary services for the next seven years.
According to the self-regulatory organization, Anthony Bigatton engaged in deceitful and fraudulent misconduct while working with BitConnect in 2017 and 2018. He was providing unlicensed financial expertise and product advice to his clients.
Though the investigation into the matter is still under progress, the regulator has sufficient evidence to believe that the New South Wales resident is “unfit” and not a “proper person” to offer pecuniary advice. ASIC also asserted that he’s incompetent and doesn’t have adequate knowledge to provide expertise on financial products and he’s probably infringing a financial services’ regulation.
Now, Bigatton has the right to challenge the verdict with the Administrative Appeals Tribunal, a department associated with ASIC.
Many reports claim that BitConnect, through its Ponzi scheme, accumulated close to $2.6 billion from its users and investors before collapsing, and shutting down in early 2018. The crypto fraud carried out by the counterfeit company then became to be recognized as the most massive exit scam since the inception of cryptocurrency in 2008.
Like many others involved in the scam, Anthony Bigatton was also on the radar of financial regulatory authorities and legislative bodies after BitConnect crashed in January 2018. ASIC began investigating Bigatton’s moves and tracked his transactions. The Federal Court of Australia, in December 2018, ordered the freezing of all his assets. The court also placed a travel ban on him, in January 2019.
Reportedly, Anthony Bigatton earned at least $100,000 through his promotion of the fraudulent investment scheme. Madeline Bigatton, the wife of Anthony Bigatton, suddenly disappeared in March 2018. An inquiry into her disappearance and probable death is likely to launch this year.
Until the OneCoin scam, last year, that ripped investors of nearly $4 billion, the deceitful scheme carried out by BitConnect was believed to be the biggest scam ever executed in the crypto industry.