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Product Liability Conference Seminar

August 21, 2021

Baltimore partner Kali Book will speak at the DRI Product Liability Conference Seminar's Young Lawyers Breakout Session on "How to Address Ever-Expanding and Amorphous Product Liability Claims" on Aug. 21.

Product Liability Conference Seminar


June 2, 2021

SEC Brings Action Against Alleged Promoters of Crypto Lending Program

By Daniel Newman, Megan Kilissanly

On May 28, 2021, the U.S. Securities and Exchange Commission (“SEC”) filed a complaint in the United States District Court for the Southern District of New York against five individuals for their involvement in a digital asset called BitConnect, alleging they promoted the sale of unregistered securities that raised over $2 billion from retail investors.[1]  According to the complaint, between January 2017 and January 2018, four defendants promoted BitConnect by advertising its “lending program” to retail investors, while receiving a percentage of the funds they obtained, without being registered as broker-dealers with the SEC.  Specifically, the SEC alleged the four defendants promoted and touted BitConnect’s “lending program” to prospective investors, including by creating testimonial-style videos and posting them to YouTube with a referral link to the “lending program.”

The complaint alleges that four of the defendants violated section 15(a) of the Exchange Act and sections 5(a) and 5(c) of the Securities Act, while another defendant aided and abetted securities violations.  Section 15(a) of the Exchange Act requires securities brokers to be registered with the SEC or, if they are individuals, to be associated with a brokerage firm registered with the SEC.[2]  Sections 5(a) and 5(c) of the Securities Act require an issuer of securities to register offers and sales of those securities with the SEC, absent certain exemptions.[3]  The complaint seeks injunctive relief, disgorgement plus interest, and civil penalties.

Anyone looking to promote a digital asset should proceed with caution because such actions may constitute a sale of a security.

Nelson Mullins’s Securities & Enforcement Group has extensive experience responding to government inquiries and investigations and representing clients in related litigation, and is available to help companies and individuals navigate and respond to these inquiries.  

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[1] Complaint, Securities and Exchange Commission v. Trevon Brown et al., No. 1:21-cv-04791 (S.D.N.Y May 28, 2021).

[2] 15 U.S.C. § 78o(a).

[3] 15 U.S.C. § 77e(a).

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