'Promote shady crypto investment and you can be held liable,' says US court

business-standard.com:

In a landmark decision that can have its ramifications in several countries battling the rise of cryptocurrencies including India, a court ruling in the US has made it clear that influencers and promoters could be held liable for "peddling shady crypto investments".

The ruling by the 11th Circuit Court of Appeals in the US has come in a 2018 case where some investors filed a class-action lawsuit against open-source cryptocurrency BitConnect and its promoters for running a Ponzi scheme and persuading them to invest for high returns.

BitConnect's promoters told its victims that if they handed over their Bitcoin for a period of time, their crypto would be used by an automated trading bot that would return huge profits.

In September, Glenn Arcaro, acenumber one promoter" of BitConnect, pleaded guilty to participating in a massive conspiracy to defraud BitConnect investors in the US and abroad, in which investors were fraudulently induced to invest over $2 billion.

The BitConnect scheme is the largest cryptocurrency fraud scheme ever charged criminally.

Now, the 11th Circuit Court of Appeals has ruled in the investors' favour, allowing the case to proceed against Arcaro and one of his regional promoters, Ryan Maasen, reports The Verge.

David Silver, an attorney for the plaintiffs, tweeted late on Friday that "the law is clear: promote on social media, you can and will be held liable".

"According to the appeals court, the marketers insisted that they could not be held liable because the Securities Act covers sales pitches to particular people, not communications directed to the public at large."

This is an incredibly important decision that will reverberate for years to come.

"The Securities Act provides no free pass for