Bitconnect Class Action Lawsuit - FULL SUMMONS with NAMES PART 1 - January 28th 2018

Checkout my video breaking down the Lawsuit:

Case 9:18-cv-80086-DMM Document 1 Entered on FLSD Docket 01/24/2018 Page 1 of 50
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
Civil Action No. ________________________________
CHARLES WILDES, individually; FRANCISCO DORIA, individually;
ARIC HAROLD, individually; AKIVA KATZ, individually;
JAMES GURRY, individually; RONALD NELSON, individually;
and on behalf of All Others Similarly Situated;
Plaintiffs,
v.
BITCONNECT INTERNATIONAL PLC, a foreign corporation;
BITCONNECT LTD., a foreign corporation;
BITCONNECT TRADING LTD., a foreign corporation;
GLENN ARCARO, an individual;
TREVON BROWN a/k/a TREVON JAMES, an individual;
RYAN HILDRETH, an individual;
CRAIG GRANT, an individual;
JOHN DOE NO. 1 a/k/a CRYPTONICK, an individual;
and JOHN DOE NOS. 2-10, individuals;
Defendants.
________________________________________________/
INTRODUCTION
Plaintiffs CHARLES WILDES, FRANCISCO DORIA, ARIC HAROLD, AKIVA KATZ,
JAMES GURRY, and RONALD NELSON (“Plaintiffs”), individually and on behalf of all other
persons similarly situated as defined herein, by and through undersigned counsel, hereby sue
BITCONNECT INTERNATIONAL PLC, a foreign corporation; BITCONNECT LTD., a foreign
corporation; BITCONNECT TRADING LTD., a foreign corporation (the business entities
collectively referred to herein as “BITCONNECT”); GLENN ARCARO, an individual; TREVON
BROWN a/k/a TREVON JAMES, an individual; RYAN HILDRETH, an individual; CRAIG
GRANT, an individual; JOHN DOE NO. 1 a/k/a CRYPTONICK, an individual; and JOHN DOE
NOS. 2-10, individuals (collectively referred to as “Defendants”), for damages and for equitable relief.
In support thereof, Plaintiffs allege as follows:
PRELIMINARY STATEMENT

This nationwide class action is brought by Plaintiffs CHARLES WILDES,
FRANCISCO DORIA, ARIC HAROLD, AKIVA KATZ, JAMES GURRY, and RONALD
NELSON, individually and on behalf of a class of similarly situated investors (the “Class Members”)
who contributed millions of dollars’ worth of cryptocurrency to a trading platform and lending
program fraudulently promoted and operated by Defendants. Plaintiffs alone were responsible for
the following investments:

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  CURRENT VALUATION OF LOSS
  NAME
  (in USD) [APPROX.]
  Charles Wildes
  $11,500.00
  Francisco Doria
  $141,500.00
  Aric Harold
  $128,000.00
  Akiva Katz
  $200,000.00
  James Gurry
  $150,000.00
  Ronald Nelson
  $140,000.00
  TOTAL
  $771,000.00

In mid-January 2018, BITCONNECT boasted a market cap of over $2.5 billion.
However, that purported fortune appears to have been built through the use of fraudulent means and
a wide-reaching Ponzi scheme that defrauded investors, made a mockery of state and federal securities
laws, and employed an army of social media mercenaries who were paid to bring more unsuspecting
victims into the fraud.

BITCONNECT guaranteed investors up to a forty percent (40%) total return per
month on their investments, following a four-tier investment system based on the sum of the initial
deposit. The more money an investor put down, the greater the return that investor could purportedly
receive each month over a scheduled period of time -- regardless of market performance or the
fluctuating price of cryptocurrency.

Moreover, regardless of the amount of the initial investment, each investor was
promised a one percent (1%) return on investment on a daily basis, which BITCONNECT purported
would be generated by its own proprietary trading bot and volatility software -- a promise that would
turn a $1,000 investment into a $50 million return within three years of daily compounded interest.

Even more aggressive than its promises, though, was BITCONNECT’s enlisted army
of multi-level affiliate marketers who were paid by BITCONNECT to use BITCONNECT-supplied
materials to recruit new investors through eye-catching and interest-piquing social media channels,

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  such as YouTube and Facebook. Defendants GLENN ARCARO, TREVON BROWN a/k/a
  TREVON JAMES, RYAN HILDRETH, CRAIG GRANT, and CRYPTONICK were among the
  more prominent BITCONNECT recruiters, but were certainly not the only ones to preach the false
  gospel of BITCONNECT to unsuspecting investors in the United States and abroad.

On January 17, 2018 -- as the unsustainable growth of BITCONNECT’s scheme grew
larger, and the sound of government regulators coming to take a closer look into BITCONNECT’s
operations grew louder -- BITCONNECT suddenly shut down its trading platform and lending
program, a maneuver that precipitated an almost immediate ninety percent (90%) plummet in the
value of BITCONNECT’s investors’ $2.5+ billion holdings.

Although BITCONNECT contended, in the wake of terminating its trading and
lending functions, that it would continue to support the proprietary cryptocurrency token it had
created and required its investors to purchase (the BitConnect Coin [BCC]), that promise was hollow;
as the only true value the token held was on BITCONNECT’s own platform. The damage was already
done, and investors holding BCC suffered 90+% losses on their investments at BITCONNECT.

Plaintiffs and Class Members seek compensatory and equitable relief rescinding their
investments in BITCONNECT and restoring to them the assets and funds they were fraudulently
induced into investing.
GENERAL ALLEGATIONS
THE PARTIES
Plaintiffs

Plaintiff CHARLES WILDES (“WILDES”) is an individual domiciled in Boynton
Beach, Florida and is sui juris.

Plaintiff FRANCISCO DORIA (“DORIA”) is an individual domiciled in Miami,
Florida and is sui juris.

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Plaintiff ARIC HAROLD (“HAROLD”) is an individual domiciled in Dover, Florida
and is sui juris.

Plaintiff AKIVA KATZ (“KATZ”) is an individual domiciled in Chicago, Illinois and
is sui juris.

Plaintiff JAMES GURRY (“GURRY”) is an individual domiciled in Covina, California
and is sui juris.

Plaintiff RONALD NELSON
(“NELSON”) is an individual domiciled in
Sacramento, California and is sui juris.
The Corporate Defendants

Defendant BITCONNECT INTERNATIONAL PLC, is a foreign for-profit
company organized in England and Wales and incorporated under the Companies Act 2006 as a
private company limited by shares. BITCONNECT INTERNATIONAL PLC lists its principal place
of business at Grant Thornton House, 22 Melton Street, Kings Cross, London, United Kingdom NW
1 2EP.

Defendant BITCONNECT LTD. is a foreign for-profit company organized in
England and Wales and incorporated under the Companies Act 2006 as a private company limited by
shares. BITCONNECT INTERNATIONAL PLC lists its principal place of business at The
Panorama, Park Street, Ashford, United Kingdom TN24 8EZ.

Defendant BITCONNECT TRADING LTD., is a foreign for-profit company
organized in England and Wales and incorporated under the Companies Act 2006 as a private
company limited by shares. BITCONNECT TRADING LTD. lists its principal place of business at
23 St. Elizabeth Avenue, Bootle, United Kingdom L20 6FA.

Upon information and belief, the BITCONNECT entities are wholly interrelated and
are used interchangeably as instrumentalities for the fraud described herein.

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  The Affiliate/Recruiter Defendants

Defendant GLENN ARCARO is an individual domiciled in Moorpark, California and
is sui juris. According to paperwork filed with the corporate registry office in the United Kingdom,
GLENN ARCARO is an active Director of BITCONNECT INTERNATIONAL PLC. GLENN
ARCARO not only served BITCONNECT by managing a team of U.S.-based affiliates/recruiters; he
also served as one of the most successful affiliate/recruiters for BITCONNECT himself, soliciting
hundreds if not thousands of BITCONNECT investors in the United States and abroad through
social media sites such as YouTube and Facebook.

Defendant TREVON BROWN a/k/a TREVON JAMES (“TREVON JAMES”) is
an individual domiciled believed to be domiciled in the United States and is sui juris. TREVON
JAMES served as an affiliate/recruiter for BITCONNECT, soliciting hundreds if not thousands of
BITCONNECT investors in the United States and abroad through social media sites such as YouTube
and Facebook.

Defendant RYAN HILDRETH is an individual domiciled in Laguna Nigel, California
and is sui juris. RYAN HILDRETH served as an affiliate/recruiter for BITCONNECT, soliciting
hundreds if not thousands of BITCONNECT investors in the United States and abroad through
social media sites such as YouTube and Facebook.

Defendant CRAIG GRANT is an individual believed to be domiciled in the United
States and is sui juris. CRAIG GRANT served as an affiliate/recruiter for BITCONNECT, soliciting
hundreds if not thousands of BITCONNECT investors in the United States and abroad through
social media sites such as YouTube and Facebook.

Defendant JOHN DOE NO. 1 a/k/a CRYPTONICK is an individual believed to be
domiciled in the United States and is sui juris. His true name is unknown at this time, as is the state of
his domicile. CRYPTONICK served as an affiliate/recruiter for BITCONNECT, soliciting hundreds

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  if not thousands of BITCONNECT investors in the United States and abroad through social media
  sites such as YouTube and Facebook.

JOHN DOE NOS. 2-10 are individuals located in the United States and abroad who
served as affiliates/recruiters for BITCONNECT, soliciting hundreds if not thousands of
BITCONNECT investors in the United States and abroad through social media sites such as YouTube
and Facebook.
Other Liable Persons/Entities

In addition to those persons and entities set forth as Defendants herein, there are likely
other parties who may well be liable to Plaintiffs, but respecting whom Plaintiffs currently lack specific
facts to permit them to name such person or persons as a party defendant. By not naming such
persons or entities at this time, Plaintiffs are not waiving their right to amend this pleading to add such
parties, should the facts warrant adding such parties.
JURISDICTION AND VENUE
Subject Matter Jurisdiction

This Court has jurisdiction over the subject matter of this action pursuant to 28 U.S.C.
§ 1332, as amended by the Class Action Fairness Act of 2005, because the matter in controversy
exceeds Five Million Dollars ($5,000,000.00), exclusive of interest and costs, and is a class action in
which some members of the Class are citizens of different states than Defendants. See, 28 U.S.C.
§ 1332(a) and 1332(d)(2)(A). This Court also has supplemental jurisdiction over the state law claims
pursuant to 28 U.S.C. § 1367.
Personal Jurisdiction

This Court has personal jurisdiction over Defendants because:
(a) at least one
Defendant is operating, present, and/or doing business within this District, and (b) Defendants’
breaches and unlawful activity occurred within this District.

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Defendants solicited investors in this jurisdiction, including Plaintiffs WILDES and
DORIA, to invest funds and assets with BITCONNECT -- reaping from those investors large sums
of money and other assets, including valuable cryptocurrency.

In light of the foregoing, Defendants purposefully availed themselves of the benefits
of operating in this jurisdiction; and this Court may exercise personal jurisdiction over Defendants.
Venue

Venue is proper pursuant to 28 U.S.C. § 1391 in that a substantial part of the events
or omissions giving rise to the claims set forth herein occurred in this judicial district, as several of the
BITCONNECT investors reside in Florida.

In light of the foregoing, this District is a proper venue in which to adjudicate this dispute.
FACTUAL ALLEGATIONS APPLICABLE TO ALL COUNTS
THE BITCONNECT BUSINESS

BITCONNECT INTERNATIONAL PLC; BITCONNECT LTD.; and
BITCONNECT TRADING LTD. (collectively “BITCONNECT”) are all parts of the same foreign
technology organization that conducted its business on the internet, principally by means of a website
accessible at www.bitconnect.co.

BITCONNECT described itself as “an open source all-in-one bitcoin and crypto
community platform designed to provide multiple investment opportunities with cryptocurrency
education where it is entirely possible to find the independence we all desire, in a community of like-
minded, freedom-loving individuals who, like you, are seeking the possibility of income stability in a
very unstable world.”

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When BITCONNECT referred to “all-in-one bitcoin and crypto community
platform,” it was referring to the ability to trade and profit from cryptocurrencies1, including bitcoin,
and to gain access to Initial Coin Offerings (“ICOs”).2

BITCONNECT created its own digital token called BitConnect Coin (BCC).

BITCONNECT described BitConnect Coin as an open source, peer-to-peer,
community-driven decentralized cryptocurrency that allows owners to store and invest their wealth.

BITCONNECT claimed on its website that investors could “begin staking or holding
BitConnect Coin and watch [their] interest grow” and that “the more [investors] hold, the more [they] earn.”

BITCONNECT further represented on its website that:
(a) BitConnect Coin was “the investment tool [investors] need to jump start
[their] financial security”;
(b) Investors could “[s]ecure [their] future by gaining quick profit growth for
tomorrow that is practical and attainable”;
(c) The investment ensures “financial freedom is available and [investors] can
start today. Store and invest wealth and earn substantial interest and
investment”; and
(d) Investors who purchased BitConnect Coin were purchasing “an interest-
bearing asset with 120% return per year. It is that simple.”
1 Cryptocurrencies are digital assets created by companies or individuals that take the form of a virtual
coin or token. Bitcoin is an example of one such cryptocurrency, and there are more than one
thousand other virtual coins or tokens currently in existence. Virtual coins and tokens are primarily
issued and distributed on a “blockchain” -- a cryptographically-secured ledger which exists on the
internet. Virtual coins and tokens are traded on online platforms, typically called cryptocurrency
exchanges, and they can be traded for other digital assets or fiat currencies, such as the U.S. Dollar or Euro.
2 An ICO is an offering to the public by a company or an individual for the sale of its/his/her newly-
created digital asset, virtual coin, or token. The company or individual conducting the ICO sells the
cryptocurrency to investors using the internet in exchange for something of value, which can be other
digital assets or fiat currencies, such as the U.S. Dollar or Euro. Companies and individuals ostensibly
use ICOs to raise capital to fund technology projects without the challenges posed by traditional
fundraising restrictions.

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BITCONNECT purported to offer investment opportunities that allow individuals to
profit from: (1) BITCONNECT’s trading of digital tokens through a proprietary, secret automated
trading system it called its “volatility software,” (2) its digital token (the BitConnect Coin), and (3) its
referral program.
BITCONNECT INVESTMENTS

BITCONNECT offered investments (the “BitConnect Investments”) to the general
public, including the residents of Florida.

The BitConnect Investments, as described below, are the BitConnect Lending
Program and the BitConnect Staking Program.
BitConnect Lending Program

BITCONNECT offered and sold to the public an investment it called the “BitConnect
Lending Program.”

BITCONNECT represented that its investors in the program would earn up to forty
percent (40%) interest per month over a specified term and an additional rate of interest calculated on
a daily basis.

BITCONNECT indicated that the interest was earned through the profits generated
by its proprietary, secret trading system (the “volatility software”).

BITCONNECT published statements on its website and elsewhere that suggested that
investors were guaranteed the return of their principal investment in as soon as one-hundred twenty
(120) days.

To take part in the BitConnect Lending Program, investors first had to purchase
bitcoin with their fiat currency, such as the U.S. Dollar or Euro. BITCONNECT then directed
investors to deposit their bitcoin into the BitConnect BCC Exchange platform. Once deposited,
BITCONNECT instructed each investor to sell his/her/its bitcoin to BITCONNECT in exchange

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  for its own digital token (the BitConnect Coin). Investors then “loaned” their BitConnect Coins back
  to BITCONNECT; and BITCONNECT claimed to use the BitConnect Coins that it borrowed from
  investors to fund the trading activities of the proprietary, secret “volatility software” trading system.

BITCONNECT published the following graphic to demonstrate how the BitConnect
Lending Program operated:

BITCONNECT touted the investment as a “safe way to earn a high rate of return on
. . . investment[s] without having to undergo a significant amount of risk.”

BITCONNECT provided a chart to give the impression that the returns from the
BitConnect Lending Program are guaranteed and that each investor would receive back his/her/its
principal capital invested within a set period of time, to wit:
BitConnect Staking Program

BITCONNECT also offered and sold to the general public an investment it called the
“BitConnect Staking Program.”

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BITCONNECT represented that investors in this program would earn interest of up
to ten percent (10%) per month over a specified term.

BITCONNECT indicated the interest was earned through “Proof of Stake Minting.”

BITCONNECT represented that “Proof of Stake Minting” was a process in which
rewards are distributed to those “helping maintain the security of the network via proof of holding.”

In the BitConnect Staking Program, investors first had to purchase bitcoin with their
fiat currency, such as the U.S. Dollar or Euro. BITCONNECT then directed investors to deposit
their bitcoin into the BitConnect BCC Exchange platform. Once deposited, BITCONNECT
instructed each investor to sell his/her/its bitcoin to BITCONNECT in exchange for its own self-
created digital token (the BitConnect Coin). Investors then had to download and install on their
computers the BitConnect-QT wallet software and hold the BitConnect Coins in the BitConnect-QT
wallet for more than fifteen (15) days. The funds that BITCONNECT paid to investors were
purportedly based on the number of BitConnect Coins, or “stake,” each investor held in the
BitConnect-QT wallet installed on the investor’s computer.

BITCONNECT published the following graphic to demonstrate how the BitConnect
Staking Program operated:

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The amount of interest paid to investors was purportedly contingent upon the dates
of the investors’ investments.

BITCONNECT even provided a chart to demonstrate the purported guaranteed rate
of return from the BitConnect Staking Program, to wit:

Notwithstanding the foregoing, BITCONNECT never registered any offerings of
securities, or filed either claims for exemption from securities registration or notice filings with respect
to securities covered under either state or federal law, as they were required to do.
THE BITCONNECT INVESTMENTS ARE SECURITIES

The BITCONNECT investors invested in a common enterprise and with an
expectation that the increased value of their BitConnect Investments would produce a substantial
return on their investment that would be derived solely from the efforts of others -- namely,
Defendants.

In short, the thing for which Plaintiffs and each Class Member invested his/her/its
valuable assets looks like a security, functions like a security, and fits the definition of a security.
Securities regulators look beyond the form or label someone appends to his/her/its activity and
instead consider the actual substance and purpose of the activity.

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  BitConnect Investors Invested Their Funds in a Common Enterprise

As noted above, BITCONNECT investors deposited their bitcoin into the
BitConnect BCC Exchange platform -- a common pool of funds that commingled each investor’s
investment.

Moreover, the BitConnect Staking Program, for example, required BITCONNECT
investors to maintain their investments in a common pool for a minimum period of time so that the
community of interests could produce the purported investment returns promised.
BitConnect Investors Had an Expectation of Profit

BITCONNECT investors viewed the BitConnect Investments as opportunities for profit.

In addition to the representations set forth above, BITCONNECT made the
following statements on its website:
(a)
“You can invest BitConnect coin in BitConnect lending platform
exclusively from the BitConnect Dashboard. This investment option
involves profiting from BitConnect trading bot and volatility software.
You will receive daily profit based on your investment options”;
(b) “Upon investment term completion, you will receive your CAPITAL
BACK to take out from the BitConnect lending platform or optionally
reinvest back in lending platform to continue receiving daily profit”; and
(c)
“It takes 15 days to mature your coin from last received interest block.
Once you receive interest block in your staking wallet, you are required to
wait for another 15 days to find next interest block.”

BITCONNECT provided a Daily Interest Chart on its website that showed the daily
interest that it purported to have paid to its investors in the three months prior to that date.

Prior to January 17, 2018, that chart showed no days of negative returns.

For example, a snapshot of the chart from January 4, 2018 appeared to show an
average daily interest rate of about one percent (1%), to wit:

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An average daily interest rate of about one percent (1%) compounds to an annual
return of over three thousand percent (3,000%).

Annual compounded investment returns of over three thousand percent (3,000%) are
extremely unusual in financial markets.

Guaranteed annual compounded investment returns of over three thousand percent
(3,000%) are a known “red flag” for fraud, specifically for the risk that the investment might be a
Ponzi scheme.
BitConnect Investors Expected That
They Would Profit from BitConnect’s Efforts

BITCONNECT investors expected to profit from the efforts of BITCONNECT and
its agents.

BITCONNECT investors believed, based on representations of fact made by
BITCONNECT in its promotional materials, that investors could profit by merely holding and staking
BitConnect Coins, or by enjoying the guaranteed returns provided by BITCONNECT’s proprietary,
secret trading system (the “volatility software”).

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Further, investors expected that BITCONNECT and its agents would expend
significant efforts to continue to develop the “volatility software” and that such development would
increase the value of the investors’ BitConnect Coins.

BITCONNECT stated that “Investing on BitConnect platform . . . is a safe way to
earn a high rate of return on your investment without having to undergo a significant amount of risk.”

BITCONNECT also claimed to investors that “The interest rate that we can guarantee
on your investment while using our investment platform is calculated by our BitConnect Price
Volatility Software and accrued daily.”

Based on the statements listed above, investors expected that they would profit solely
from the essential managerial efforts of BITCONNECT.
BITCONNECT OFFERED INVESTMENTS TO THE GENERAL PUBLIC

BITCONNECT offered its investments to the general public, including residents of
Florida, through its websites and its sales people, which it calls “affiliates.” BITCONNECT’s
conducted related to the offers and sales of the investments to the general public is willful.
The BitConnect Websites

BITCONNECT maintains a website accessible at http://bitconnect.co and a website
accessible at http://bitconnectcoin.co (the “BitConnect Websites”). The BitConnect Websites are
accessible worldwide to the general public, including residents of Florida.

The BITCONNECT Investments were available for purchase by individuals in the
United States and worldwide through the BitConnect Websites and affiliated websites rendered in
foreign languages. The investments were promoted on social media pages including, but not limited
to, Facebook, YouTube, Reddit, Instagram, and Craigslist.

BITCONNECT promoted its investments on the BitConnect Websites by making the
following representations:

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  (a)
  “There are multiple ways to invest in the BitConnect platform with
  different level of earning opportunity associated”;
  (b) “You can invest BitConnect Coin in BitConnect lending platform
  exclusively from the BitConnect Dashboard. This investment option
  involved profiting from BitConnect trading bot and volatility software.
  You will receive daily profit based on your investment option. Upon
  investment term completion, you will receive your capital back to take out
  from the BitConnect lending platform or optionally reinvest back in
  lending platform to continue receiving daily profit”; and
  (c)
  “Invest your wealth in community-driven decentralized cryptocurrency.
  Using BitConnect public exchanges, you can buy, sell and trade
  BitConnect Coin (BCC) directly to and from each other with no central
  organization involved.”
  THE BITCONNECT AFFILIATES

BITCONNECT used sales agents, which it refers to as “affiliates,” to direct investors
to the BitConnect Websites for the purpose of purchasing BitConnect Investments. In return for
funneling additional investors to BITCONNECT, the affiliates were paid sizeable commissions, as
explained below.

The team of BITCONNECT affiliates/recruiters in the United States were managed,
coached, and supported by Defendant GLENN ARCARO, a BITCONNECT Director and
shareholder.

Upon information and belief, Defendant GLENN ARCARO instructed his team at
meetings, organized sales presentations, and assisted with marketing pitches and materials for the
BITCONNECT affiliates to sharpen their recruiting techniques and lure in BITCONNECT investors.

Defendant GLENN ARCARO is also believed to have created and orchestrated an
online training program -- commonly referred to as “BCC School” -- that purported to teach people
how to buy bitcoin and how to take advantage of investment opportunities like those being offered
by BITCONNECT. To “attend” BCC School, an interested person had to have a “sponsor.”
GLENN ARCARO and his team of affiliates served as those sponsors.

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In essence, though, the BCC School was little more than a conduit to get BCC School
“graduates” to open up accounts at BITCONNECT, for which GLENN ARCARO and his team of
affiliates reaped from BITCONNECT the riches of each client referral.

Defendants GLENN ARCARO, TREVON JAMES, RYAN HILDRETH, CRAIG
GRANT, and CRYPTONICK were among the more prominent BITCONNECT affiliates who
recruited unsuspecting investors in the United States and abroad to purchase BitConnect Investments.

Defendants JOHN DOE NOS.
2-10 also served as affiliates/recruiters for
BITCONNECT, soliciting hundreds if not thousands of BITCONNECT investors in the United
States and abroad through social media sites such as YouTube and Facebook.

BITCONNECT encouraged affiliates to promote BitConnect Investments through
social media, blogs, videos, websites, and newsletters by means of a referral, or commission, program.

BITCONNECT created marketing materials which were used by its affiliates,
including music videos, cartoons, and online presentations that describe BitConnect Coins, the
BitConnect Lending Program, and the BitConnect Staking Program.

BITCONNECT also provided affiliates with online advertisements, often referred to
as “banners,” that were incorporated into websites and used to solicit investments in the BitConnect
Staking Program and the BitConnect Lending Program.

Affiliates also used unique hyperlinks referred to as “referral links” to offer the
BitConnect Investments on their personal social media pages.

Investors used the referral links to access the BitConnect Websites and purchase
BitConnect Investments. The referral links ensured the affiliate was credited with the appropriate
commission according to the BitConnect Referral Program.

In the BitConnect Referral Program, BITCONNECT paid commissions to affiliates
who used referral links to offer and sell BitConnect Investments. The value of the commissions were

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  based on the affiliate’s placement in a multi-level matrix of other affiliates, and it ranged from two
  percent (2%) to five percent (5%) of the amount invested. These commissions were paid to affiliates
  in bitcoin. The commission matrix was changed by BITCONNECT in November 2017.

BITCONNECT provided charts to demonstrate the commissions paid to affiliates in
the BitConnect Referral Program. The commission matrices used by BITCONNECT prior to and
after November 2017 are shown below:

BITCONNECT affiliates used online solicitations containing referral links to offer
BitConnect Investments to residents of Florida, residents of many other states in the United States,
and residents of numerous countries worldwide.

BITCONNECT promoted its referral program by representing that:
(a)
“BitConnect offering [sic.] a lucrative bonus program which enables you to
earn affiliate commission if your referral invest in BitConnect lending”;
(b) “At the same time, generate a serious income for yourself through our
bitcoin affiliate program. You can start earning your free bitcoins today
for every person you refer and who starts lending on BitConnect
platform”;
(c)
“As a means to spread the word, help grow our community, and offer you
a great way to earn free Bitcoins, we are now offering a lucrative bonus
program which enables you to earn bitcoin for every new user who signs
up and lends BitConnect Coin (BCC) to our lending platform using your
affiliate link”;
(d) “BitConnect’s referral program is designed to provide 3 Levels of earning
potential to you based on the number of lenders. You will earn a
commission every time your referral lends BitConnect Coin (BCC) on our

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  platform. Invite your friends and family to join BitConnect via your
  unique referral link to start earning a serous income from our bitcoin
  affiliate program”; and
  (e)
  “Spread the word on social media and other online platforms to help
  making [sic.] BitConnect platform a success for the entire community of
  lenders.”
  BITCONNECT OMITTED AND MISREPRESENTED MATERIAL FACTS IN ITS MARKETING

BITCONNECT willfully failed to disclose and misrepresented material facts when
offering the BitConnect Investments, including, but not limited to, the following:
(a) The identity of the principals of BITCONNECT and the true location of
BITCONNECT’s operations and management;
(b) Information about the assets and liabilities of BITCONNECT and any
other information that indicates the means by which BITCONNECT will
provide investors with a guaranteed daily return, regardless of the value of
bitcoin;
(c) Information about the proprietary, secret trading system (the “volatility
software”), details of its trading records and historical performance, proof
of its existence, and the risk factors associated with its use;
(d) That the BitConnect Investments are securities and are not registered with
any government regulator, as required by state and federal law;
(e) That only registered dealers or agents can be paid commissions for
referrals or sales of securities; and
(f) That BITCONNECT affiliates who receive such commissions for their
sale of BitConnect Investments without being properly registered are
doing so in violation of state and federal securities laws.
THE BITCONNECT INVESTMENTS WERE A PONZI SCHEME

Contrary to the allegations of fantastic investment returns through the power of its
proprietary, secret trading volatility software and the communal power of the BitConnect Staking
Program, BITCONNECT was actually operating a Ponzi scheme.

Any investment returns provided to BITCONNECT investors were not legitimately
generated; rather, BITCONNECT simply used new BITCONNECT investors’ money to pay the
promised returns on outstanding BITCONNECT investors’ investments.

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In addition, BITCONNECT used new BITCONNECT investors’ funds to pay the
BITCONNECT affiliates -- including, but not limited to, Defendants GLENN ARCARO, TREVON
JAMES, RYAN HILDRETH, CRAIG GRANT, and CRYPTONICK -- commissions for their role
in bringing additional victims into the scheme.
BITCONNECT’S OFFERINGS VIOLATE NUMEROUS SECURITIES LAWS

Moreover, BITCONNECT and its affiliates engaged in the offer and sale of
unregistered securities.

By soliciting the investing public in the manner they have, BITCONNECT and its
affiliates -- led in the United States by Defendant GLENN ARCARO -- have imposed significant
danger to the public welfare because:
(a) The securities offered
(the BitConnect Investments) have not been
registered with any state or federal securities regulator, as required by state
and federal securities laws. Proper registration of securities is an essential
safeguard service to require companies to provide accurate and material
information to enable people to make reasoned investment decisions and
to protect the public from fraud;
(b) BITCONNECT has not registered as a dealer in, or salesman of, securities.
Registering as a dealer or salesman, as required by numerous state and
federal securities laws, ensures that people transacting business as
securities dealers and salesmen are competent, honest, properly regulated
and are authorized to do so;
(c) The current speculative activity associated with cryptocurrencies makes
investors particularly susceptible to investing without performing their
normal due diligence. Further, most cryptocurrency exchanges are
unregulated markets and therefore are vulnerable for manipulative trading,
fraud, and deception;
(d) BITCONNECT has omitted material facts in its offerings and has made
misrepresentations of fact which make the BitConnect Investments
particularly dangerous for the investing public. Further, BITCONNECT
is encouraging members of the investing public to become its affiliates and
therefore to act as unregistered dealers and salesmen in violation of state
and federal securities laws; and
(e) BITCONNECT’s marketing materials are disproportionately targeted
towards children, young adults, people of limited financial means, and

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  unsophisticated investors who may not be able to sustain a complete loss
  of their investment without enduring significant financial hardship.

On January 4, 2018, the Texas State Securities Board issued to BITCONNECT an
Emergency Cease and Desist Order in which the Securities Commissioner of the State of Texas
presented his office’s conclusion that, inter alia:
(a) the BitConnect Investments are securities;
(b) BITCONNECT had violated numerous securities regulations by offering
the BitConnect Investments for sale in Texas;
(c) BITCONNECT had engaged in fraud and made materially misleading
statements about the BitConnect Investments that were likely to deceive
the public; and
(d) BITCONNECT’s conduct, acts, and practices threaten an immediate and
irreparable public harm.

Likewise, on January 12, 2018, the State of North Carolina’s Department of the
Secretary of State - Securities Division issued to BITCONNECT a Temporary Cease and Desist Order
in which the State presented its conclusion that the BitConnect Investments were unregistered
securities being offered to the residents of the State and that those investments posed an immediate
and irreparable harm to the residents of North Carolina.
BITCONNECT ABRUPTLY CLOSED ITS OPERATIONS

On the morning of January 17, 2018 -- amidst increased scrutiny from government
regulators and watchful cryptocurrency industry experts -- BITCONNECT abruptly closed its
cryptocurrency lending and exchange platform.

According to a release on BITCONNECT’s website, the company blamed the
shutdown on “continued bad press” surrounding the platform, the two “Cease and Desist” letters
from securities regulators in Texas and North Carolina, and multiple DDoS attacks on the website.

Within moments of BITCONNECT’s notice, the price of BitConnect Coin plummeted
nearly ninety percent (90%) in value; and the token is believed to be effectively useless now.

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As a result of Defendants’ fraudulent and misleading activities -- as well as their
violation of multiple securities laws -- Plaintiffs and the Class have suffered damages believed to be
greater than $2 billion.
FACTS SPECIFIC TO INVESTOR PLAINTIFFS
Charles Wildes

Beginning on or about December
14,
2017, Plaintiff WILDES funded his
BITCONNECT account.

To make his investments with BITCONNECT, Plaintiff WILDES logged onto to
BITCONNECT’s website from his home and followed the instructions provided.

On January 17, 2018, when BITCONNECT closed its lending and trading platforms,
Plaintiff WILDES’s holdings at BITCONNECT were believed to be valued at approximately
$11,500.00.
Francisco Doria

Beginning on or about June 17, 2017, Plaintiff DORIA funded his BITCONNECT
account.

To make his investments with BITCONNECT, Plaintiff DORIA logged onto to
BITCONNECT’s website from his home and followed the instructions provided.

On January 17, 2018, when BITCONNECT closed its lending and trading platforms,
Plaintiff DORIA’s holdings at BITCONNECT were believed to be valued at approximately
$141,500.00.
Aric Harold

Beginning on or about November
23,
2017, Plaintiff HAROLD funded his
BITCONNECT account.

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To make his investments with BITCONNECT, Plaintiff HAROLD logged onto to
BITCONNECT’s website from his home and followed the instructions provided.

On January 17, 2018, when BITCONNECT closed its lending and trading platforms,
Plaintiff HAROLD’s holdings at BITCONNECT were believed to be valued at approximately
$128,000.00.
Akiva Katz

Beginning on or about January 2, 2018, Plaintiff KATZ funded his BITCONNECT
account.

To make his investments with BITCONNECT, Plaintiff KATZ logged onto to
BITCONNECT’s website from his home and followed the instructions provided.

On January 17, 2018, when BITCONNECT closed its lending and trading platforms,
Plaintiff KATZ’s holdings at BITCONNECT were believed to be valued at approximately
$200,000.00.
James Gurry

Beginning on or about October
17,
2017, Plaintiff GURRY funded his
BITCONNECT account.

To make his investments with BITCONNECT, Plaintiff GURRY logged onto to
BITCONNECT’s website from his home and followed the instructions provided.

On January 17, 2018, when BITCONNECT closed its lending and trading platforms,
Plaintiff GURRY’s holdings at BITCONNECT were believed to be valued at approximately
$150,000.00.
Ronald Nelson

Beginning on or about October
24,
2017, Plaintiff NELSON funded his
BITCONNECT account.

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To make his investments with BITCONNECT, Plaintiff NELSON logged onto to
BITCONNECT’s website from his home and followed the instructions provided.

On January 17, 2018, when BITCONNECT closed its lending and trading platforms,
Plaintiff NELSON’s holdings at BITCONNECT were believed to be valued at approximately
$140,000.00.
CLASS ACTION ALLEGATIONS

A class action is the proper form to bring Plaintiffs’ and the Class Members’ claims
under FRCP 23. The potential class is so large that joinder of all members would be impractical.
Additionally, there are questions of law or fact common to the class, the claims or defenses of the
representative parties are typical of the claims or defenses of the class, and the representative parties
will fairly and adequately protect the interests of the class.

Plaintiffs bring this nationwide class action pursuant to Rule 23 of the Federal Rules
of Civil Procedure on behalf of themselves and all members of the following class and subclass:
NATIONWIDE CLASS: All BITCONNECT investors and account
holders who, between November 15, 2016 and January 17, 2018,
transferred bitcoins, alternative cryptocurrencies, or any other form
of monies or currency to BITCONNECT in furtherance of
BITCONNECT’s investments. Excluded from the class are:
Defendants themselves, Defendants’ retail employees, Defendants’
corporate officers, members of Defendants’ boards of directors,
Defendants’ senior executives, Defendants’ affiliates, and any and all
judicial officers (and their staff) assigned to hear or adjudicate any
aspect of this litigation.
The Nationwide Class asserts claims for Unregistered Offer and
Sale of Securities in Violation of Sections
5(a) and 5(c) of the
Securities Act; Fraud in the Offer and Sale of Securities in Violation
of Section 17(a)(1) of the Securities Act; Fraud in the Offer and Sale
of Securities in Violation of Section 17(a)(2) and 17(a)(3) of the
Securities Act; Rescission of Contract; Fraudulent Inducement;
Fraudulent Misrepresentation; Negligent Misrepresentation;
Conversion; and Civil Conspiracy (see Counts I - IV and VIII-XII).

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  FLORIDA SUBCLASS: All Florida resident BITCONNECT investors
  and account holders who, between November
  15,
  2016 and
  January 17, 2018, transferred bitcoins, alternative cryptocurrencies, or
  any other form of monies or currency to BITCONNECT in
  furtherance of BITCONNECT’s investments. Excluded from the
  class are: Defendants themselves, Defendants’ retail employees,
  Defendants’ corporate officers, members of Defendants’ boards of
  directors, Defendants’ senior executives, Defendants’ affiliates, and
  any and all judicial officers (and their staff) assigned to hear or
  adjudicate any aspect of this litigation.
  In addition to the claims asserted by the Nationwide Class, the
  Florida Subclass asserts claims for Unregistered Offer and Sale of
  Securities in Violation of Fla. Stat. §§ 517.011, et seq.; Fraud in the
  Offer and Sale of Securities in Violation of Fla. Stat. §§ 517.011, et seq.;
  and Violation of Florida’s Deceptive and Unfair Trade Practices Act,
  Chapter 501, § 211(1), Fla. Stat. (“FDUTPA”) (see Counts V - VII).

This action satisfies all of the requirements of Federal Rules of Civil Procedure,
including numerosity, commonality, predominance, typicality, adequacy, and superiority.
Numerosity

Members of the Class are so numerous and geographically dispersed that joinder of all
members is impractical.

While the exact number of class members remains unknown at this time, upon
information and belief, there are at least hundreds if not thousands of putative Class members.

Again, while the exact number is not known at this time, it is easily and generally
ascertainable by appropriate discovery.

It is impractical for each class member to bring suit individually.

Plaintiffs do not anticipate any difficulties in managing this action as a class action.
Commonality and Predominance

There are many common questions of law and fact involving and affecting the parties
to be represented.

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PART 2 at: https://steemit.com/bitcoin/@elpompador/bitconnect-class-action-lawsuit-full-summons-with-names-part-2-january-28th-2018