The U.S. Securities and Exchange Commission (SEC) has denied a Freedom of Information Request (FOIA) regarding the BitConnect cryptocurrency investment scheme, citing an exemption usually applied to records tied to law enforcement.
The FOIA was sent by Florida lawyer David Silver, who though the law firm Silver Miller is representing clients in one of a number of lawsuits filed against BitConnect in recent weeks. Silver had previously sought a FOIA in relation to the controversial blockchain project Tezos, only to receive an identical rejection letter on Feb. 6.
As is the case with such letters, the SEC did not confirm or deny the existence of an investigation, and the letter itself is not proof that an investigation. That said, Silver - who provided a copy of the newest letter to CoinDesk - said that he had been contacted by investigators from the Commodity Futures Trading Commission (CFTC) regarding BitConnect, interpreting that as evidence that an inquiry is underway at the U.S. commodities trade regulator.
A representative for the CFTC did not immediately respond to a request for comment.
"The SEC and CFTC's decision to investigate BitConnect is far from surprising. The thousands of people who have contacted me over the last month have lost collectively over one billion dollars," Silver told CoinDesk in an email, adding:
"As investors in cryptocurrency have begun to understand, where you invest and store your money is critical in this space. "Here today, gone tomorrow" is a scary mantra, whether it be at exchanges like BitConnect, BitGrail, Kraken, or CoinCheck. Customers need to feel secure in their exchange of choice."
As previously reported by CoinDesk, BitConnect was the subject of several cease-and-desist notices of U.S. state regulators, who cried foul ahead of a planned initial coin offering. The situation came to a head in mid-January when the team behind BitConnect announced that it would end its lending platform - a key characteristic of the scheme many have described as a Ponzi scheme or an outright fraud - in a move that sent the value of the BCC token plunging.
As of press time, BCC is trading at roughly $3.58, according to data from CoinMarketCap.
Records image via Shutterstock
The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at firstname.lastname@example.org.
Australia Warns of Fake 'Tax Collectors' Demanding Bitcoin
The Australian Taxation Office (ATO) issued a warning about would-be scammers trying to con people out of their cryptocurrency.
Since late last year, scammers have been calling Australians and impe
Bitcoin briefly falls below $8,000 after Google says it will ban cryptocurrency ads
Bitcoin prices briefly fell below $8,000 on Wednesday following news that Google, the world's largest online ad provider, plans to ban cryptocurrency advertising. Facebook, the second largest
Crypto Is a 'Crock'? Twitter Reacts to House ICO Hearing
Despite the overall measured tone among lawmakers at Wednesday's House subcommittee hearing on initial coin offerings, a few members of the panel made inflammatory statements.
Social media users re
UK Crypto Exchange to Launch Bitcoin Futures Contracts
A British cryptocurrency exchange is planning to enter the bitcoin futures market.
CoinfloorEX, a London-based exchange founded in 2013, announced Wednesday that it would launch bitcoin futures con
Congressional hearing on cryptocurrencies devolves into bitcoin bash fest
A House Financial Services subcommittee met Wednesday in what was supposed to be an overview of the cryptocurrency landscape. The two-hour hearing raised more questions than answers, and shined a
Square closes near all-time high after analyst compares stock to early days of Amazon
Shares of Square hit a new all-time intraday high Wednesday, jumping more than 5 percent after an analyst report compared the stock to 'Amazon in its early days.' Shares closed at $54.60
Bitcoin Price Sheds $800 In Drop to 1-Month Low
Bitcoin hit a one-month low on Wednesday as its price slipped below $8,300 during afternoon trading.
CoinDesk's Bitcoin Price Index (BPI) had fallen to as low as $8,287.98 as of press time, represe
Brazilian Officials Caught Using Bitcoin in $22 Million Scam
Police officials in Rio de Janerio have uncovered a money laundering scheme in which state officials siphoned off money intended for prison supplies, using bitcoin to exchange some of the proceeds.