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Sydney court convicts Bigatton of giving unauthorised financial advice on cryptocurrencies
The Sydney District Court sentenced John Bigatton, an Australian promoter of the now-defunct cryptocurrency exchange BitConnect, for providing unlicensed financial advice.
The conviction follows charges brought by the Australian Securities and Investments Commission (ASIC), demonstrating the commission’s determination to protect investors in Australia.
John Bigatton specialised in promoting BitConnect through seminars and social media between August 2017 and January 2018. ASIC’s investigation found that Bigatton’s activities included significant representations of the profitability of BCC’s investments_bigatton Advertising – a personality claimed that BCC’s value would increase to at least $1,000.
However, the court said his comments amounted to unauthorised financial promotion, prohibited by Australian economic laws.
The verdict against Bigatton also includes a three-year good behaviour charge and a five-year ban from running a company. These are some of the measures ASIC is taking to ensure the strength of Australia’s financial sector and public confidence.
The BitConnect Schema
Established in 2016, BitConnect has developed an ERC20 token, BitConnect Coin, which is traded against BitcoinThis plan was driven by the platform’s high returns from re-lending BCC through the platform’s “volatility lending” program, where investors lend BCC for a fixed term at assumed guaranteed returns.
However, ASIC and other regulators later recognised that the structure had all the hallmarks of a Ponzi scheme.
At the seminars, the key messages of Bigatton’s promotional strategies were high profitability and better results than the stock market. Because of Clarys’ statements, investors saw their money disappear when BitConnect, which he was promoting, collapsed. This judgment from the Sydney District Court means that financial licensing laws must be respected, especially in high-risk investment areas such as cryptocurrency.
Ongoing legal proceedings
In December 2018, ASIC obtained an asset freezing order through the Federal Court of Australia, including bitcoin. This was the first time an Australian regulator had obtained freezing orders on digital assets.
Civil forfeiture proceedings under the Proceeds of Crime Act by the Australian Federal Police are still pending in the Supreme Court of New South Wales. The value of the frozen assets is estimated at one millionth of a dollar.
ASIC Deputy Chair Sarah Court said:
“The provision of unlicensed financial advice denies Australian investors access to essential protections and undermines confidence in the Australian financial services sector. ASIC is committed to taking action against the illegal promotion of high-risk digital assets to protect Australian investors.”
International repercussions
In early 2022, BitConnect founder Satish Kumbhani was indicted by a jury in a US court for orchestrating a multi-billion dollar international crypto scam. The US Securities and Exchange Commission reported that Kumbhani had allegedly moved from India to an unknown foreign country, with his current whereabouts unknown.
In January 2023, a U.S. federal district court in San Diego ruled that more than 800 victims of the BitConnect Ponzi scam should receive a portion of a $17 million restitution recovered from the $2.4 billion scamThis international case highlights the widespread impact of unregulated cryptography systems and the need for strict regulatory measures.