TALLAHASSEE (CBSMiami/NSF) — A federal appeals court on Friday backed investors in a potential class action lawsuit against the promoters of a cryptocurrency that crashed in 2018 after what judges described as a fraudulent scheme. Ponzi.
A three-judge panel of the 11th U.S. Circuit Court of Appeals overturned the decision of U.S. District Judge for South Florida Donald Middlebrooks to dismiss the case involving cryptocurrency platform BitConnect.
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The appeals court said the plaintiffs, who had purchased cryptocurrency, could sue under a law known as the Securities Act of 1933.
Cryptocurrency promoters have used YouTube videos to entice buyers.
“Traders insist they cannot be held liable because securities law covers sales pitches to particular individuals, not communications to the general public,” the 14-person opinion said. pages, written by Justice Britt Grant and joined by Justices Elizabeth Branch and Ed Carnes.
“That is not the case – neither the Securities Act nor our precedent imposes this kind of limitation. Solicitation has long been done through mass communications, and online videos are just a new way of doing an old thing. Because securities law provides no free pass for online solicitations, we waive the district court’s dismissal of the claims under a section of the law.
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Defendants in the case include Glenn Arcaro, who was described in the notice as a national promoter who managed a team of regional promoters.
Friday’s ruling sent the case back to the district court.
The US Department of Justice and the US Securities & Exchange Commission also took action after BitConnect collapsed.
The Justice Department, for example, said last year that Arcaro pleaded guilty to participating in a conspiracy to defraud BitConnect investors.
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