US Court Freezes BitConnect Assets as Lawsuits Mount

A temporary restraining order freezing BitConnect's assets has been granted in the U.S. after a second lawsuit was filed against the exchange Monday.

AccessTimeIconJan 31, 2018 at 3:00 p.m. UTC
Updated Sep 13, 2021 at 7:30 a.m. UTC
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A temporary restraining order (TRO) freezing BitConnect's assets has been granted in the U.S. after a second lawsuit was filed against the cryptocurrency exchange and lending platform on Monday.

The order – granted by Chief District Judge Joseph McKinley, Jr. at the U.S. District Court, Western District of Kentucky  – requires the parties to disclose cryptocurrency wallet and trading account addresses, as well as the identities of anyone to whom BitConnect has sent digital currencies within the last 90 days.

The defendants have 10 days to comply with the order. In addition to the disclosures, BitConnect International PLC, BitConnect LTD, BitConnect Trading LTD and Ryan Maasen are prohibited from transferring any assets they may possess until they are granted permission by the court, according to the TRO.

The order comes in response to a second class action lawsuit filed against BitConnect after it shut down its trading and lending platform, alleging that the exchange is a Ponzi scheme.

The plaintiff, Kentucky resident Brian Paige, filed the lawsuit on behalf of every investor in BitConnect, noting that bitcoin and other cryptocurrency assets had been converted into BitConnect Coin (BCC) when the company announced it was shutting down its exchange. BCC, which was trading at more than $300 at the time, had crashed to about $6 at press time.

The court found that the plaintiffs stood to lose any chance of recovering their funds if BitConnect's assets were not frozen, and that enforcing a TRO "is in the public interest because the public is interested in preventing massive consumer fraud and other securities violations."

The lawsuit continued:

"This temporary restraining order is being entered without notice to Defendants to preserve the status quo and prevent irreparable harm until such time as the Court may hold a hearing."

Due to the nature of the lawsuit and alleged securities violations, the court also noted that the plaintiff "has shown a strong likelihood of success," and that the TRO "would present the status quo and give the Court the ability to make a meaningful ruling on the merits of this case."

The TRO will expire on Feb. 13, according to the filing.

Law image via Shutterstock

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