Influencers beware: promoting the wrong crypto could mean facing a class-action lawsuit

Illustration by Alex Castro / The Verge

The story of BitConnect doesn't include any rapping Forbes bloggers slash money launderers or dubiously-obtained ape JPGs, but this case has spawned a court.

If you've forgotten about this particular scam, BitConnect's promoter told its victims that if they handed over theircryptocurrencies for a period of time, they would be used by an automated trading bot that would return huge profits. The operators paid off older investors with funds from the new ones and brought in $10 million per week. The scam took in more than $2 billion in investments.

Some investors filed a class-action lawsuit against BitConnect and several of its most prominent promoters in order to hold them liable for violating the 1933 Securities Act. The district court dismissed the case because the investors were found guilty of federal wire fraud.

The 11th Circuit Court of Appeals ruled in favor of the investors, allowing the case to proceed against Arcaro and one of his regional promoters.

In their opinion, Judge Grant wrote, "Securities Act precedents do not apply to this case." We never said that the efforts at persuasion must be personal.

The law is clear that you can and will be held liable if you promote on social media.

The appellate court today confirmed what so many of the BitConnect promoter themselves have conceded in their guilty pleas to the criminal charges brought against them: the BitConnect investment program is a fraud, and soliciting investors through social

The attorney is inviting anyone who bought into a coin to reach out to him as well, based on an online solicitation. How might the ruling apply to some of the videos you've seen? That could depend on the regulators view of what constitutes a security. It's possible that a product like Bitcoin could be considered a commodity, but it's not.