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Indian Police Uncover Cryptocurrency Scam Involving BitConnect Promoter

Indian police have discovered an alleged multi-million dollar cryptocurrency scam involving a BitConnect promoter.

Indian police have reportedly discovered an alleged multi-million dollar cryptocurrency scam, involving a BitConnect promoter, local media outlet the Times of India reported on June 3.

The Criminal Investigation Department (CID) in Gujarat, India, has accused Divyesh Darji — a promoter of now-defunct cryptocurrency investment program BitConnect that ceased its operations in January of last year — of luring people to invest into “Regal Coin,” promising unrealistic returns of as high as 5,000% on investment. A CID official said that the estimated amount of the scam reaches into the tens of millions of rupees.

Per the CID, Darji began offering the investment scheme back in 2017, asking potential investors to buy the coin with an investment of $2 to get $100 on each Regal Coin. A CID official said that “Darji had promised that the investor would get the principal amount in 99 days. He had also promised to give interest on principal amount as per robotic trading profit along with 1% to 1.6% bonus as referral bonus at every 11 days.”

The scam was discovered after a Surat resident, Vishal Savalia approached the CID saying that he had lost around $26,783 in the Regal Coin scam. A CID official further explained that “Savalia had allegedly given the money to Darji’s daughter, Dimki through another accused and Darji’s aide, Ramdayal Purohit and Dimki herself had downloaded Regal Coin app in Savalia’s cellphone and get him registered on its website.”

According to the police, only Purohit is presently under arrest, while Darji was released on bail a month ago and is on the lam. This is reportedly the third case involving Darji.

At the end of August 2018, Indian police arrested Darji for allegedly promoting BitConnect and scamming investors. Darji reportedly said that he had been the India head of BitConnect. The CID claims that staff at the BitCoinnect office in Surat admitted that promoters had amassed “crores of rupees from thousands of investors.”

In February of this year, India’s Union Home Minister Rajnath Singh inaugurated the cyber forensic lab and Cyber Protection Awareness and Detection Centre, with a special unit focused on cryptocurrency.

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Senior BitConnect Promotor Arrested by Indian Authorities

A promoter of the controversial cryptocurrency platform BitConnect was arrested on August 19, according to a local news outlet in India.

Former BitConnect India head Divyesh Darji was arrested at Indira Gandhi International Airport in New Delhi on Sunday, the India Express reported. The Criminal Investigation Department of Gujurat police announced they arrested Darji after receiving an alert from the nation’s immigration agency.

According to P. G. Narwade, an inspector from the police department, Darji was en route from Dubai to the city of Ahmedabad when he was arrested.

He said:

“The accused held seminars, events in India and other countries promising high interest — daily interest rate of 1 percent — on investment in BitConnect coins. The cost of one BitConnect coin on January 16, 2018, when the company shut down, was USD 362.”

As CoinDesk reported, BitConnect’s lending service was shut down this past January after regulators in Texas and North Carolina said the company was engaging in the sale of unregistered securities tied to a token sale. The shutdown resulted in the startup’s BCC token’s price crashing, falling from its high of $400 at the beginning of the year to $17.25 on Jan. 17. The token is trading below 70 cents as of press time.

In addition to the unregistered security sale, BitConnect was also infamously accused of conducting a Ponzi scheme, particularly after several prominent figures in the crypto community levied criticisms against it, including the founder of ethereum, Vitalik Buterin.

After the platform’s shutdown, former BitConnect investor and promoter Trevon James said the FBI had begun investigating the project, according to a YouTube video he posted in March.

Police car image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Police Arrest Alleged India Head of Now-Defunct Bitconnect Scam

Indian police have arrested a man who was allegedly involved in promoting the Bitconnect investment scam, Financial Express reported August 18.

The suspect, Divyesh Darji, is said to have been the India head of Bitconnect, the high-yield investment program that ceased its operations in January 2018 after coming under scrutiny for appearing to be a fraudulent Ponzi scheme.

Darji, a resident of Surat city, had reportedly already been issued with a look-out circular and was arrested August 18 in Delhi airport, after a tip-off from local immigration services. Financial Express cites Inspector P G Narwade of Criminal Investigation Department (CID-Crime) of Gujarat police as saying that:

“[Bitconnect] came into existence in 2016, and in 2017, it launched the BitConnect [BCC] coin. It remained active till January this year. It released 2.8 crore [28 million] coins, out of which 1.8 crore [18 million] coins were sold to investors. The accused held seminars, events in India and other countries promising high interest — daily interest rate of 1 per cent — on investment in BitConnect coins.”

Narwade added that the cost of one BCC coin on January 16, 2018 – the date on which Bitcoinnect formally closed its operations – was $362.

According to Financial Express, a recently filed Freedom of Information Report (FIR) shows that this is the third case under investigation by the Surat unit of CID. Local promoters of Bitconnect are alleged to have fled with 1.14 crore (11.4 million) rupees worth of Bitcoin from one investor.

The CID further claims that staff at the Bitcoinnect office in Surat admitted that promoters had overall amassed “crores [tens of millions] of rupees from thousands of investors.”

The CID was reportedly initially alerted to the scam following allegations from another Surat resident, Shailesh Bhatt, who had claimed to have been kidnapped and robbed of 90 million rupees worth of Bitcoin by local police.

As it subsequently emerged, Bhatt had himself been implicated in the alleged extortion of 1.55 billion rupees’ worth of crypto and cash at gunpoint – including 2,400 bitcoins – from two accomplices of another local Bitconnect promoter, Satish Kumbhani. Bhatt, himself a Bitconnect investor, had reportedly held Kumbhani responsible for the loss of his own funds.

In the midst of the CID’s investigations into this web of incidents, Bitconnect suddenly ceased its operations, meaning that scores of investors were no longer able to redeem or trade their BCC holdings.

As Cointelegraph has previously reported, BCC reached the summit of its popularity in December 2017, when the token’s market capitalization hit about $2.7 billion. Just days later, on Jan. 4, the state of Texas issued a cease and desist order against BitConnect for the selling of unlicensed securities, triggering a crash of the BCC token and the platform’s closure.

Since then, former BitConnect investors have been pursuing a class action lawsuit seeking compensation from the company.

The case has drawn widespread condemnation from the crypto community, including Ethereum’s Vitalik Buterin.

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Texas State Securities Board Issues Cease and Desist Order to Crypto Promoters

The Texas State Securities Board (SSB) has issued an emergency cease and desist order to a network of cryptocurrency-related firms, the SSB announced in an official statement July 12.

SSB commissioner Travis J. Iles took emergency action on July 11, suspending a group of crypto-related companies that allegedly offered fraudulent crypto investments to state residents. According to the order, the companies are immediately suspended from offering securities in Texas until the security is registered or exempt.

The order lists a Utah-based network of three companies; Mintage Mining LLC, Symatri LLC, and NUI Social. According to the SSB’s statement, Mintage Mining offers illegal and fraudulent investments in cryptocurrency mining. Symatri is issuing a newly launched coin dubbed Kala and offering investors an opportunity to acquire Kala-mining equipment. NUI Social, touted as a multi-level marketing company with over 300,000 members in 140 countries, recruits individuals for the cryptocurrency investments.

The order also names BC Holdings and Investments, which is allegedly involved in sales of crypto mining investments offered by Mintage Mining, as well as Houston-based Wyatt McCullough and William Douglas Whetsell, who are affiliated with NUI Social.

The order cites violations of the Texas Securities Act, claiming that the companies “[made] deceptive claims to the public,” such as promising “extraordinary returns” of up to 250 percent annually and claiming that the companies offer the investments in compliance with securities laws. It states that Symatri failed to disclose Kala token details and provide information on the risks of crypto investments.

Earlier this week, the SSB released a report on mid-year enforcement highlights, featuring protection for “investors from fraudulent cryptocurrency-related investment products.” The SSB was “the first state securities regulator to issue an administrative order” against illegal crypto-related firms in 2017. SSB investigations of crypto-related investments have led to “nearly 40 pending or completed enforcement actions.”

In February, the SSB issued an emergency cease and desist order to, citing poor disclosure of information about the company. In January, the SSB issued a similar order against notorious scam project Bitconnect for selling unlicensed securities.

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YouTube Accused of Negligence in BitConnect Fraud Lawsuit

Digital media giant YouTube has been named in class action lawsuit tied to the collapse of BitConnect, the cryptocurrency lending platform widely accused of fraud.

BitConnect’s shutdown in January – which followed a series of warnings from U.S. investors – triggered a number of investor lawsuits, including one filed in late January in Florida. BitConnect’s platform was tied to a token and in-house crypto exchange, both of which have gone defunct in the months since (once valued above $400, the token is now worth less than $0.50 apiece according to CoinMarketCap).

That lawsuit later became a consolidated class-action following a court ruling in June, coming in the wake of claims of an ongoing inquiry by the Federal Bureau of Investigation.

The lawsuit faults YouTube for negligence in not policing the content on its site – particularly promotional videos by BitConnect boosters and affiliates – more tightly. The plaintiffs wrote that, all told, the top 10 most popular BitConnect affiliates “published over 70,000 hours of unedited content, generating 58,000,000 views and luring hundreds if not hundreds of thousands of victims.”

They went on to state:

“By enacting policies designed to prevent bad actors (such as those soliciting investments in fraudulent Ponzi schemes) from disseminating harmful, offensive or inappropriate content through its platform, YOUTUBE owed, by its own assumption, Plaintiffs and the Class a duty to reasonable care to prevent such content from harming its users.”

YouTube, according to the lawsuit, “failed as a gatekeeper to protect its users.”

Google – YouTube’s parent company – notably moved in March to ban cryptocurrency ads, including those tied to initial coin offerings (ICOs). That policy went into effect last month.

In an email to CoinDesk, David Silver, founder of the Silver Miller law firm that filed the class-action suit, urged the company to “take responsibility” for its alleged role.

“The platform allowed BitConnect to reach hundreds of thousands of potential investors, all while YouTube was aware that BitConnect was a scam. As the old saying goes: Sometimes when you lie down with dogs, you get fleas,” he wrote.

Google did not immediately respond to a request for comment.

Image Credit: BigTunaOnline /

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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YouTube Added as Defendant in Class Action Lawsuit Against BitConnect

According to court documents filed July 3, YouTube has been added as a defendant in a class action lawsuit against BitConnect.

The lawsuit was initially filed on January, 24 by six individuals represent by law firm Silver Miller. The claimants state that crypto investment platform BitConnect issued crypto tokens that were unregistered securities, and obtained additional funds through a “wide-ranging Ponzi scheme.” The plaintiffs stated that their personal losses totalled $771,000. BitConnect allegedly used the funds received from new investors to meet the expectations of the existing ones.

Per court documents acquired by Cointelegraph, BitConnect and its affiliated parties posted a number of promotional videos on YouTube, which were deemed inappropriate as the material allegedly lured potential investors to a fraudulent investment scheme. YouTube is said to have failed to delist and demonetize the published videos, which exposed “countless” YouTube users to injurious videos and illegally-promoted investments.

The top ten BitConnect affiliates on YouTube reportedly posted more than 70,000 hours of unedited content, which generated 58,000,000 views. The document says that the number of views of several of the affiliate promoters’ videos greatly exceeded the threshold numbers for the “enhanced” eligibility standards. Notably, a fair number of users notified YouTube of fraudulent activity by BitConnect, posting videos with titles such as “How bitconnect scam works in great detail,” “Craig Grant Explains the Bitconnect scam,” and others. In an email to Cointelegraph, David Silver of Silver Miller said:

“This case is not about YouTube being the speaker or publisher of the content on its website. Instead, liability is predicated on YouTube’s failure to act after learning from content directly published on YouTube of the readily foreseeable harm posed by its advertising partners… As the old saying goes: Sometimes when you lie down with dogs, you get fleas.”

The claimants state that if YouTube had conducted an appropriate search of its databases, it would have delisted the harmful BitConnect videos. Instead, YouTube allegedly accepted a growing number of BitConnect-related videos, which resulted in numerous victims, including many members of the Class.

The document also refers to Google LLC, which changed its financial products policy to ban all cryptocurrency-related ads and associated content due to a potential harm to users of Google-owned platforms, including YouTube. The document concludes:

“YouTube failed as a gatekeeper to protect its users from, and warn its users of, the very harm YouTube set out to prevent with its advertising protocols and proprietary algorithms.”

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Tokenizer: Simplifying ICO Investing To Maximize Your Return On Investment

One of the greatest leaps of faith a crypto enthusiast can do, is to invest his hard earned money in an ICO that captivates his imagination as a feasible project, as well as his thirst for profits. The unregulated ICO industry has been a hotbed of successful projects such as Ethereum’s and Tron’s as well has total scams like Pincoin token and Bitconnect.

So how do you differentiate the gems from the dirt in ICO investing?

Tokenizer is a unique and innovative investment solution that keeps crypto investments simple for the audience. The platform helps global investors, like you and I, to tap into the ever growing crowd-funding market using blockchain digital tokens. With many ICOs being available daily, it is difficult for any one individual to choose the right one that will deliver a working product as well as a handsome Return On Investment (ROI).

The Tokenizer platform, which is duly incorporated in Hong Kong, simplifies this process by allowing users to directly pay for custom investment plans using Bitcoin (BTC), Ethereum (ETH), Bitcoin Cash (BCH) and Litecoin (LTC), irrespective of the size of the contribution. Once the funds are received, they are used to purchase digital tokens during token pre-sales which have discounted offers available exclusively to institutional investors or pool managers. These tokens are then sold later at a profit to ensure all users receive up to 50% net on each investment made.

Once the team accesses the token pre-sales that are traditionally inaccessible to individual investors, they purchase the tokens through an ICO pool from the individual funds collected from registered users and according to their unique simple investment plan. The team at Tokenizer manages the high profile blockchain tokens allowing the users to earn daily interest on their crypto. The Tokenizer team firmly believes that there’s a big potential in the crypto world and are particularly proud to be providing services in this field to the regular investor further reducing their investment risks.

All an interested individual has to do, is to create an account through the traditional methods of entering an email, username and a 6 digit pin code for security. As soon as that is done, the user can fund the account using the aforementioned currencies of BTC, ETH, LTC and BTH. The platform can handle micro as well as large investments thus offering lower fees and better prices than traditional banks. Once the deposit is confirmed, the user selects a customized plan and starts receiving daily earnings. The user is then free to withdraw these earnings through a cash-out option on the platform.

There is also an easy to use online calculator for users to figure out their returns based on the amount of initial investment they want to put in. The value of the initial investment can range as follows and with respect to each cryptocurrency:

BTC 0.01 50
LTC 0.25 2,500
ETH 0.05 550
BCH 0.05 550

In addition to having the above qualities, Tokenizer has a referral program where users get additional rewards for anyone who signs up for the service through them. Tokenizer uses a revenue sharing model to stimulate the expansion of the platform. Each direct referral earns a user a reward of 5% on each deposit made as well as 5% reward based on the daily dividend.

In summary, Tokenizer reduces the risk in ICO investing by having a stellar team doing the assessment of each project thoroughly to guarantee its viability. If the project proves to be solid, the team has access to pre-sale events where they buy digital tokens in bulk and through a pool of funds deposited by users on the platform. These tokens are later sold at a profit guaranteeing a 50% Return on Investment for each user at the end of the whole process. There is also a referral program that introduces further revenue sharing as well as introduces new funds from the new users, to the ICO pool.


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Unpacking the 5 Biggest Cryptocurrency Scams

Cryptocurrencies have revolutionized the way the world looks at transactions – but they’ve also facilitated some monumental scams over the past nine years.

The success of Bitcoin and a number of altcoins jumpstarted an industry that is incorporating Blockchain technology in a number of innovative ways.

While the smartest minds have created some game-changing companies backed by the power of Blockchain and cryptocurrencies, nefarious minds have also jumped on the bandwagon, fleecing unwitting investors in elaborate scams.

ICOs fever spawns massive scams

Since Bitcoin’s inception in 2009, people have become increasingly enamoured with the idea of Blockchain technology. Over time, developers and business minds began creating their own solutions with this decentralized ledger technology.

This led to the development of Ethereum and other virtual currencies, with the former in part responsible for a boom in initial coin offerings (ICO) in 2017.

As an ICO is essentially a round of public finding and is typically launched by a tech startup which sells inhouse cryptocurrency tokens to prospective investors, these investors buy tokens in the hopes that company will launch its product and the tokens will grow in value.

An ICO is not unlike an initial public offering, which is when a traditional company makes its share available for purchase to the general public. In fact, this is where the ICO moniker stems from.

Given that there are no promises that an ICO will make good on its future plans, investors take a leap of faith when they part ways with their money. This of course has led to a plethora of scams billed as ICOs, which have seen thousands of investors left out of pocket.

Here are five of the biggest ICO scams in history.

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Pincoin and iFan

The most recent large-scale ICO scam grabbed headlines in April. Two ICOs, run by the same company operating out of Vietnam, are believed to have swindled around 32,000 investors of a combined $660 mln.

The company in question, Modern Tech, packed up its offices in Ho Chi Minh city last month, making off with investors money. The scam is believed to be the biggest in ICO history.

A number of investors protested outside the vacant offices in the city on April 8, after the company refused to process cash withdrawals. The city’s administration has ordered police to investigate the fraud.

Both ICOs have been classified as multi-level marketing scams. iFan was advertised a social media platform for celebrities to promote their content to fans. Meanwhile Pincoin was promising 40 percent monthly returns on investments made. The project claimed to be building an online platform encompassing an ad network, auction and investment portal and peer-to-peer marketplace built on Blockchain technology.


OneCoin has been the subject of a number of investigations over the past 18 months. Officially labelled as a ‘clear ponzi scheme’ in India in July 2017, it was fined €2.5 mln by Italian authorities two months later.

Cointelegraph has previously warned readers to stay clear of the operation, as OneCoin does not even operate a legitimate decentralized cryptocurrency. Furthermore it does not have a public ledger and its Bulgarian offices were raided in January with servers seized by authorities as international investigations and court cases continue against the company.

Scandals in countries around the world summed up the fact that OneCoin is indeed a massive scam.

In 2016, over $30 mln dollars were seized by Chinese authorities investigating the OneCoin operation in the country.

The company claimed to be officially licensed in Vietnam last year as well, but this was later refuted by the country’s government. More than five countries have warned investors of the risks involved for those choosing to invest in the company, including Thailand, Croatia, Bulgaria, Finland and Norway.


Long accused of being a ponzi scheme, Bitconnect discontinued operations in January in the wake of a cease and desist order from two American financial regulators.

Users exchanged Bitcoin for Bitconnect Coin (BCC) on the Bitconnect platform, launched in Jan. 2017, and were promised astronomical returns on their investments.

Furthermore the company ran a lending program, where users lent BCC out to other users to make interest depending on how much BCC they’d lent on the platform. There was also a typical, ponzi scheme referral system.

Nevertheless, the wider cryptocurrency was hardly sympathetic when the operation shut down its lending scheme and exchange platform.

A number of users have since launched a class action lawsuit against Bitconnect to recoup lost funds – amounting to $700,000 for their particular claim.


This particular ICO was nipped in the bud in Dec. 2017 after being labelled a typical return on investment ponzi scheme. Plexcorp was promising investors over 1300 percent return on investment per month before the US Securities and Exchange Commission (SEC) ordered the company to stop operations.

Over $15 mln had been raised during the Plexcoin ICO. Luckily all of the funds were frozen by the SEC and founder Dominic Lacroix was jailed.

Interestingly, it was the first time the SEC stepped in and charged an ICO through its Cyber Crime Unit. Plexcoin’s offerings was also classed as a security, hence the SEC’s decision to press charges.


Having been endorsed by the likes of superstar boxer Floyd Mayweather and DJ Khaled, Centratech was thrust into the spotlight for its supposed Visa and MasterCard debit card service that would allow users to convert cryptocurrencies to fiat.

Two of the founders have since been arrested on fraud charges relating to the ICO, which raised around $32 mln, according to Ars Technica.

The SEC highlighted the extreme lengths the founders, Sohrab “Sam” Sharma and Robert Farkas, went to in order to dupe investors.

“The SEC also alleges that to promote the ICO, Sharma and Farkas created fictional executives with impressive biographies, posted false or misleading marketing materials to Centra’s website, and paid celebrities to tout the ICO on social media.”

The US regulator is looking to seek permanent injunctions, and intends to force Sharma and Farkas to return stolen funds with interest. The pair will also be barred from serving as company officers or directors, and be banned from participating in any securities offerings.

Investors need to wisen up

As these five scams show, fraudsters will go to extraordinary lengths to swindle unsuspecting investors.

It highlights a need for investors to do their due diligence when it comes to investment decisions.

Cointelegraph reached out to American investor and founder of Skill Incubator Chris Dunn for comment on the Pincoin and iFan debacle.Overall, Dunn believes that the cryptocurrency community needs to become more discerning towards new ICOs. If not, governments around the world are likely to take sterner stances towards cryptocurrencies in general.

“The crypto community needs to promote financial education and ethical investment practices, otherwise governments will over-regulate and stifle real innovation. The most effective way to protect investors is through education. Investors need to learn how to evaluate investment opportunities, quickly spot scams, and know how to manage risk.”

5 Biggest Cryptocurrency Scams

ICOs not cut from the same cloth

Sadly, scams like these are a blemish for cryptocurrencies in general. While they operate in isolation, the fact that they ride on the cryptocurrency wave smears the wider community, which is driving innovation in a number of spaces.

It provides a focus point for skeptics to attack cryptocurrencies, when in fact these scams are anything but legitimate ICOs and cryptocurrencies.

What the greater public and authorities need to avoid is assuming that ICOs are all cut from the same cloth. Undoubtedly, there are criminals looking to take advantage of the hype of a new technology. However that does not take away from the sterling work of some of the brightest minds in the IT industry.

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US: Class Action Filed Against Nano Developers, Demands ‘Recovery Fork’ Of Lost Funds

A new class action lawsuit has been filed in the United States District Court Eastern District of New York on behalf of investors in Nano (XRB, formerly Raiblocks), according to a class action complaint signed April 5.

The lawsuit is being filed by an American individual, Alex Brola, through Silver Miller law firm, and alleges that Nano’s core team both violated US securities laws by selling unregistered securities as well as negligently misrepresented the reliability of crypto exchange BitGrail, from which around 17 mln Nano ($187 mln at the time) were stolen in mid-February.

The lawsuit asks that Nano be ordered by court to “rescue fork” the investors’ missing NANO “into a new cryptocurrency in a manner that would fairly compensate the class of victims.”

In the aftermath of BitGrail’s Feb. 9 announcement on their website that the 17 mln Nano had been hacked from the exchange, Nano developers and BitGrail’s owner and operator Francesco “The Bomber” Firano reportedly entered into a conflict over whether or not Firano had asked for the ledger to be edited to “cover his losses.”

Nano then accused Firano of “misleading the Nano Core Team and the community” on their official blog.

Although Nano investor Alex Brola is the named plaintiff in the lawsuit, having reportedly bought $50,000 worth of Nano on Dec. 10, 2017, the complaint claims there are “at least hundreds if not thousands of putative Class members” that Silver Miller plans to contact during the discovery period.

Silver Miller writes in the class action notice that they are a “strong advocate for aggrieved investors harmed by the misrepresentations and illegal actions of cryptocurrency exchanges and issuers.” The law firm is currently working on class actions against crypto exchanges and services Coinbase, Kraken, BitConnect, Cryptsy, and Initial Coin Offering (ICO) promoters Monkey Capital, Giga Watt, and Tezos.

Tezos has been the subject of multiple lawsuits over the question of its compliance with SEC regulations. The Tezos class action lawsuit filed last fall by Silver Miller alleges that Tezos violated securities laws during their ICO,  which raised $232 mln, making it the world’s second largest ICO to date in terms of most funds raised.