Bitconnect Class Action Lawsuit - FULL SUMMONS with NAMES PART 2 - January 28th 2018

Case 9:18-cv-80086-DMM Document 1 Entered on FLSD Docket 01/24/2018 Page 27 of 50

When determining whether common questions predominate, courts focus on the issue
of liability; and if the issue of liability is common to the class and can be determined on a class-wide
basis, as in the instant matter, common questions will be held to predominate over individual
questions.

Common questions include, but are not limited to, the following:
(a) Whether the BitConnect Coins sold by BITCONNECT constitute
securities under federal and state securities laws;
(b) Whether BITCONNECT violated federal and state securities laws in
selling its BitConnect Coins and in failing to register them as securities;
(c) Whether statements made by Defendants about the BitConnect
Investments were false;
(d) Whether Defendants have converted the funds belonging to Plaintiffs and
the Class Members;
(e) Whether BITCONNECT owed duties to Plaintiffs and the Class
Members, what the scope of those duties were, and whether
BITCONNECT breached those duties;
(f) Whether BITCONNECT’s conduct was unfair or unlawful;
(g) Whether the terms of use for BITCONNECT’s services are
unconscionable, void, or voidable;
(h) Whether Defendants has been unjustly enriched; and
(i) Whether Plaintiffs and the Class Members have sustained damages as a
result of Defendants’ conduct.

These common questions of law or fact predominate over any questions affecting only
individual members of the Class.
Typicality

Plaintiffs’ claims are typical of those of the other Class Members because, inter alia, all
members of the Class were injured through the common misconduct described above and were
subject to Defendants’ unfair and unlawful conduct.

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Plaintiffs are advancing the same claims and legal theories on behalf of themselves and
all members of the Class.
Adequacy of Representation

Plaintiffs will fairly and adequately represent and protect the interests of the Class
Members in that they have no disabling conflicts of interest that would be antagonistic to those of the
other members of the Class.

Plaintiffs are committed to the vigorous prosecution of this action and have retained
competent counsel, experienced in complex consumer class action litigation of this nature, to
represent them.

Plaintiffs seek no relief that is antagonistic or adverse to the members of the Class.

The infringement of the rights and the damages Plaintiffs have suffered are typical of
other Class members.

To prosecute this case, Plaintiffs have chosen the law firm of Silver Miller. Silver
Miller is experienced in class action litigation and has the financial and legal resources to meet the
substantial costs and legal issues associated with this type of litigation.
Superiority

Class action litigation is an appropriate method for fair and efficient adjudication of
the claims involved herein.

Class action treatment is superior to all other available methods for the fair and
efficient adjudication of the controversy alleged herein; as it will permit a large number of Class
Members to prosecute their common claims in a single forum simultaneously, efficiently, and without
the unnecessary duplication of evidence, effort, and expense that hundreds of individual actions would
require.

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Class action treatment will permit the adjudication of relatively modest claims by
certain Class Members, who could not individually afford to litigate a complex claim against a well-
funded corporate defendant like BITCONNECT.

Further, even for those Class Members who could afford to litigate such a claim, it
would still be economically impractical.

The nature of this action and the nature of laws available to Plaintiffs make the use of
the class action device a particularly efficient and appropriate procedure to afford relief to Plaintiffs
and the Class Members for the wrongs alleged because:
(a) Defendants would necessarily gain an unconscionable advantage if they
were allowed to exploit and overwhelm the limited resources of each
individual Class member with superior financial and legal resources;
(b) The costs of individual suits could unreasonably consume the amounts
that would be recovered;
(c) Proof of a common course of conduct to which Plaintiffs were exposed is
representative of that experienced by the Class and will establish the right
of each member of the Class to recover on the cause of action alleged;
(d) Individual actions would create a risk of inconsistent results and would be
unnecessary and duplicative of this litigation;
(e) The Class Members are geographically dispersed all over the world, thus
rendering it inconvenient and an extreme hardship to effectuate joinder of
their individual claims into one lawsuit;
(f) There are no known Class Members who are interested in individually
controlling the prosecution of separate actions; and
(g) The interests of justice will be well served by resolving the common
disputes of potential Class Members in one forum.

Plaintiffs reserve the right to modify or amend the definition of the proposed class
and
to modify, amend, or create proposed subclasses before the Court determines whether
certification is appropriate and as the parties engage in discovery.

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The class action is superior to all other available methods for the fair and efficient
adjudication of this controversy.

Because of the number and nature of common questions of fact and law, multiple
separate lawsuits would not serve the interest of judicial economy.

As a result of the foregoing, Plaintiffs and the Class Members have been damaged in
an amount that will be proven at trial.

Plaintiffs have duly performed all of their duties and obligations, and any conditions
precedent to Plaintiffs bringing this action have occurred, have been performed, or else have been
excused or waived.

To enforce their rights, Plaintiffs have retained undersigned counsel and are obligated
to pay counsel a reasonable fee for its services, for which Defendants are liable as a result of their bad
faith and otherwise.
COUNT I - UNREGISTERED OFFER AND SALE OF SECURITIES
IN VIOLATION OF SECTIONS 5(a) AND 5(c) OF THE SECURITIES ACT
Plaintiffs re-allege, and adopt by reference herein, Paragraphs 1 - 156 above, and further allege:

BITCONNECT, by engaging in the conduct described above, directly or indirectly
made use of means or instruments of transportation or communication in interstate commerce or of
the mails to offer to sell or to actually sell securities, or to carry or cause such securities to be carried
through the mails or in interstate commerce for the purpose of sale or for delivery after sale.

BITCONNECT is a “seller” within the meaning of 15 U.S.C. § 77e because it or its
agents solicited Plaintiffs’ and the Class Members’ investments in the BitConnect Investments,
including BitConnect Coins.

The funds paid by Plaintiffs and the Class Members pursuant to the BitConnect
Investment protocols were pooled by BITCONNECT in an effort by BITCONNECT to secure a

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  profit for itself and the investors. As a result, the investors, including Plaintiffs and the Class Members,
  shared in the risks and benefits of the investment.

Plaintiffs and the Class Members relied on, and are dependent upon, the expertise and
efforts of BITCONNECT for their investment returns.

Plaintiffs and the Class Members expected that they would receive profits from their
investments in BITCONNECT’s efforts.

BitConnect Coins constitute investment contracts and are therefore subject to federal
securities laws, including the registration requirements promulgated thereunder.

No registration statements have been filed with the SEC or have been in effect with
respect to any of the offerings alleged herein.

By reason of the foregoing, BITCONNECT has violated Sections 5(a) and 5(c) of the
Securities Act, 15 U.S.C. §§ 77e(a) and 77e(c).

As a direct and proximate result of BITCONNECT’s unregistered sale of securities,
Plaintiffs and the Class Members have suffered damages in connection with their respective purchases
of BitConnect Coin securities in the BitConnect Investments.

Defendant GLENN ARCARO is subject to liability by virtue of his top-level executive
position with BITCONNECT and his undeniable influence over the enterprise, which provided him
the power to control or influence BITCONNECT’s actions. For example, GLENN ARCARO is an
active Director of BITCONNECT, is one of its only shareholders, and is responsible for much of the
company’s marketing of the BitConnect Investments to investors, including its operations vis-à-vis
Plaintiffs and the Class Members. As a top-level executive and controlling person of BITCONNECT,
GLENN ARCARO knew of, or recklessly disregarded, the alleged misrepresentations made by
BITCONNECT in connection with the BitConnect Investments.

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Defendant GLENN ARCARO is a culpable participant in the fraudulent scheme
described herein and caused BITCONNECT to engage in the acts and omissions which give rise to
liability under 15 U.S.C. § 77e.

Accordingly, Defendant GLENN ARCARO is a
“controlling person” of
BITCONNECT within the meaning of Section 15(a) of the Exchange Act, 15 U.S.C. § 77o.

Plaintiffs and the Class Members have suffered damages as a result of Defendant
GLENN ARCARO’s violation of Section 15(a) of the Exchange Act, 15 U.S.C. § 77o.
COUNT II - FRAUD IN THE OFFER AND SALE OF SECURITIES
IN VIOLATION OF SECTION 17(a)(1) OF THE SECURITIES ACT
Plaintiffs re-allege, and adopt by reference herein, Paragraphs 1 - 156 above, and further allege:

Defendants are “sellers” within the meaning of 15 U.S.C. § 77l(a) because they or their
agents solicited Plaintiffs’ and the Class Members’ investments in the BitConnect Investments.

The terms of the BitConnect Investments called for an investment of cryptocurrency
or fiat currency by Plaintiffs and the Class Members.

BitConnect Coins constitute investment contracts and are therefore subject to federal
securities laws, including the registration requirements promulgated thereunder.

Defendants, in the offer and sale of BitConnect Coins securities, by the use of the
means and instruments of transportation and communication in interstate commerce or by use of the
mails, directly or indirectly, have employed devices, schemes, and artifices to defraud.

In the offer and sale of the BitConnect Coins securities and as part of their scheme to
defraud, Defendants made false and misleading statements of material fact and omitted to state
material facts to investors and prospective investors, as more fully described above.

Defendants engaged in the conduct alleged herein knowingly or with reckless disregard
for the truth.

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As a direct and proximate result of the foregoing, Defendants have each violated
Sections 17(a)(1) of the Securities Act, 15 U.S.C. §§ 77q(a)(1).

Defendant GLENN ARCARO is subject to liability by virtue of his top-level executive
position with BITCONNECT and his undeniable influence over the enterprise, which provided him
the power to control or influence BITCONNECT’s actions. For example, GLENN ARCARO is an
active Director of BITCONNECT, is one of its only shareholders, and is responsible for much of the
company’s marketing of the BitConnect Investments to investors, including its operations vis-à-vis
Plaintiffs and the Class Members. As a top-level executive and controlling person of BITCONNECT,
GLENN ARCARO knew of, or recklessly disregarded, the alleged misrepresentations made by
BITCONNECT in connection with the BitConnect Investments.

Defendant GLENN ARCARO is a culpable participant in the fraudulent scheme
described herein and caused BITCONNECT to engage in the acts and omissions which give rise to
liability under 15 U.S.C. § 77l(a).

Accordingly, Defendant GLENN ARCARO is a
“controlling person” of
BITCONNECT within the meaning of Section 15(a) of the Exchange Act, 15 U.S.C. § 77o.

Plaintiffs and the Class Members have suffered damages as a result of Defendant
GLENN ARCARO’s violation of Section 15(a) of the Exchange Act, 15 U.S.C. § 77o.
COUNT III - FRAUD IN THE OFFER AND SALE OF SECURITIES
IN VIOLATION OF SECTION 17(a)(2) AND 17(a)(3) OF THE SECURITIES ACT
Plaintiffs re-allege, and adopt by reference herein, Paragraphs 1 - 156 above, and further allege:

In the offer and sale of the BitConnect Coin securities, Defendants -- by use of means
or instruments of transportation or communication in interstate commerce or by use of the mails --
directly or indirectly: (a) obtained money or property by means of untrue statements of material facts
or omitted to state material facts necessary to make not misleading the statements made, in light of
the circumstances under which they were made; or (b) engaged in transactions, practices, or courses

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  of business that operated or would operate as a fraud or deceit upon the purchasers of the BitConnect
  Coins.

Defendants acted at least negligently with respect to the facts and circumstances
described above.

As a direct and proximate result of the foregoing, Defendants have each violated
Sections 17(a)(2) and 17(a)(3) of the Securities Act, 15 U.S.C. §§ 77q(a)(2) and (3).

As a direct and proximate result of Defendants’ conduct, Plaintiffs and the Class
Members have suffered damages in connection with their respective purchases of BitConnect Coins
securities in the BitConnect Investments.
COUNT IV - RESCISSION OF CONTRACT
Plaintiffs re-allege, and adopt by reference herein, Paragraphs 1 - 156 above, and further allege:

The terms of the BitConnect Investments constitute a contract between: (1) Plaintiffs
and the Class Members, and (2) Defendants.

The contract was entered into by and between Defendants and each Class Member
between November 15, 2016 and January 17, 2018.

The terms of the BitConnect Investments called for an investment of cryptocurrency
by Plaintiffs and the Class Members.

The funds paid by Plaintiffs and the Class Members pursuant to the BitConnect
Investments were pooled by Defendants in an effort by Defendants to secure a profit for themselves
and the investors. As a result, the investors, including Plaintiffs and the Class, shared in the risks and
benefits of the investment.

Plaintiffs and the Class Members relied on, and are dependent upon, the expertise and
efforts of Defendants for their investment returns.

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The terms of the BitConnect Investments constitute an investment contract and is
therefore subject to federal and state securities laws, including the registration requirements
promulgated thereunder.

No registration statement was filed or in effect with any federal or state regulatory
body, and no exemption from registration exists with respect to the BitConnect Investments.

As a result of Defendants’ fraud, false representations, and violation of federal and
state securities laws in connection with the BitConnect Investments, Plaintiffs and the Class Members
state their demand that the Contract be rescinded and canceled.

To the extent that Plaintiffs have received from Defendants any benefits through the
contract -- though none are known to them at this time -- Plaintiffs hereby offers to restore to
Defendants those benefits, once they are identified and can be quantified.

As a direct and proximate cause of Defendants’ conduct, Plaintiffs and the Class
Members have been damaged.

Defendant BITCONNECT INTERNATIONAL PLC is subject to liability because
it solicited and otherwise participated in the sale to Plaintiffs and the Class Members of the
misrepresented and unregistered securities identified herein. Moreover, Defendant BITCONNECT
INTERNATIONAL PLC is subject to liability because it is believed to control, or have obtained
control over, a large portion of the assets invested by Plaintiffs and the Class Members which must
be disgorged and returned to Plaintiffs and the Class Members in effectuating the rescission of the
contract into which they were unlawfully led.

Defendant BITCONNECT LTD. is subject to liability because it solicited and
otherwise participated in the sale to Plaintiffs and the Class Members of the misrepresented and
unregistered securities identified herein. Moreover, Defendant BITCONNECT LTD. is subject to
liability because it is believed to control, or have obtained control over, a large portion of the assets

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  invested by Plaintiffs and the Class Members which must be disgorged and returned to Plaintiffs and
  the Class Members in effectuating the rescission of the contract into which they were unlawfully led.

Defendant BITCONNECT TRADING LTD. is subject to liability because it solicited
and otherwise participated in the sale to Plaintiffs and the Class Members of the misrepresented and
unregistered securities identified herein. Moreover, Defendant BITCONNECT TRADING LTD. is
subject to liability because it is believed to control, or have obtained control over, a large portion of
the assets invested by Plaintiffs and the Class Members which must be disgorged and returned to
Plaintiffs and the Class Members in effectuating the rescission of the contract into which they were
unlawfully led

Defendant GLENN ARCARO is subject to liability because he solicited and otherwise
participated in the sale to Plaintiffs and the Class Members of the misrepresented and unregistered
securities identified herein.

Defendant TREVON BROWN a/k/a TREVON JAMES is subject to liability
because he solicited and otherwise participated in the sale to Plaintiffs and the Class Members of the
misrepresented and unregistered securities identified herein.

Defendant RYAN HILDRETH is subject to liability because he solicited and
otherwise participated in the sale to Plaintiffs and the Class Members of the misrepresented and
unregistered securities identified herein.

Defendant CRAIG GRANT is subject to liability because he solicited and otherwise
participated in the sale to Plaintiffs and the Class Members of the misrepresented and unregistered
securities identified herein.

Defendant CRYPTONICK is subject to liability because he solicited and otherwise
participated in the sale to Plaintiffs and the Class Members of the misrepresented and unregistered
securities identified herein.

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Defendants JOHN DOE NOS. 2-10 are subject to liability because they solicited and
otherwise participated in the sale to Plaintiffs and the Class Members of the misrepresented and
unregistered securities identified herein.
COUNT V - UNREGISTERED OFFER AND SALE OF SECURITIES
IN VIOLATION OF FLA. STAT. §§ 517.011, et seq.
Plaintiffs re-allege, and adopt by reference herein, Paragraphs 1 - 156 above, and further allege:

The BitConnect Investments called for an investment of money or assets by Plaintiffs
and the Class Members -- specifically, the bitcoin, Ether, and other assets of value transferred to
Defendants in exchange for the BitConnect Coins issued by Defendants.

The funds paid by Plaintiffs and the Class Members were pooled by Defendants in the
project in an effort by Defendants to secure a profit for themselves and the Plaintiff Class. As a result,
the Plaintiff Class -- as the investors -- shared in the risks and benefits of the investment scheme.

Plaintiffs and the Class Members relied upon, and were dependent upon, the expertise
and efforts of Defendants for their investment returns.

Plaintiffs and the Class Members expected that they would receive profits from their
investments in Defendants’ efforts.

BitConnect Coins constitute investment contracts and are therefore subject to the
Florida Blue Sky Laws, including the registration requirements of Fla. Stat. § 517.07.

No registration statements have been filed with the Florida Office of Financial
Regulation or have been in effect with respect to any of the offerings alleged herein.

Similarly, no exemption from registration exists with respect to the BitConnect
Investments.

By reason of the foregoing, Defendants have violated Fla. Stat. §§ 517.07, et seq.

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Defendant GLENN ARCARO is subject to liability under Fla. Stat. §§ 517.07 and
517.211 because he solicited and otherwise personally participated and aided the sale to Plaintiffs and
the Class Members of the BITCONNECT-issued cryptocurrency at issue herein.

Defendant TREVON BROWN a/k/a TREVON JAMES is subject to liability under
Fla. Stat. §§ 517.07 and 517.211 because he solicited and otherwise personally participated and aided
the sale to Plaintiffs and the Class Members of the BITCONNECT-issued cryptocurrency at issue
herein.

Defendant RYAN HILDRETH is subject to liability under Fla. Stat. §§ 517.07 and
517.211 because he solicited and otherwise personally participated and aided the sale to Plaintiffs and
the Class Members of the BITCONNECT-issued cryptocurrency at issue herein.

Defendant CRAIG GRANT is subject to liability under Fla. Stat. §§ 517.07 and
517.211 because he solicited and otherwise personally participated and aided the sale to Plaintiffs and
the Class Members of the BITCONNECT-issued cryptocurrency at issue herein.

Defendant CRYPTONICK is subject to liability under Fla. Stat. §§ 517.07 and 517.211
because he solicited and otherwise personally participated and aided the sale to Plaintiffs and the Class
Members of the BITCONNECT-issued cryptocurrency at issue herein.

Defendants JOHN DOE NOS. 2-10 are subject to liability under Fla. Stat. §§ 517.07
and 517.211 because they solicited and otherwise personally participated and aided the sale to Plaintiffs
and the Class Members of the BITCONNECT-issued cryptocurrency at issue herein.

As a direct and proximate result of Defendants’ unregistered sale of securities,
Plaintiffs and the Class Members have suffered damages in connection with their respective purchases
of BitConnect Coin securities in the BitConnect Investments.

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  COUNT VI - FRAUD IN THE OFFER AND SALE OF SECURITIES
  IN VIOLATION OF FLA. STAT. §§ 517.011, et seq.
  Plaintiffs re-allege, and adopt by reference herein, Paragraphs 1 - 156 above, and further allege:

Fla. Stat. § 517.301 makes it unlawful for anyone, in connection with the rendering of
any investment advice or in connection with the offer, sale, or purchase of any investment or security:
(a) to employ any device, scheme, or artifice to defraud; (b) to obtain money or property by means of
any untrue statement of a material fact or any omission to state a material fact necessary in order to
make the statements made, in the light of the circumstances under which they were made, not
misleading; or (c) to engage in any transaction, practice, or course of business which operates or would
operate as a fraud or deceit upon a person.

Defendants conducted an unlawful sale of securities as defined in Fla. Stat. §§ 517.011,
et seq.

More specifically, in connection with the offer to sell a security or investment to
Plaintiffs and the Class Members, Defendants:
(a) employed a scheme to defraud Plaintiffs and the Class Members;
(b) obtained Plaintiffs’ and the Class Members’ invested funds and assets by
means of untrue statements of material fact; and
(c) engaged in transactions and a course of business which operated as a fraud
or deceit upon Plaintiffs and the Class Members.

As Defendants intended, Plaintiffs and the Class Members justifiably relied upon the
multiple material misrepresentations Defendants made to Plaintiffs and the Class Members in the
course of their solicitations in connection with Plaintiffs’ and the Class Members’ investments in the
BitConnect Investments.

As a direct and proximate result of Defendants’ violations of Fla. Stat. §§ 517.011, et
seq., Plaintiffs and the Class Members have suffered damages.

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Defendants each participated in, or aided in, the unlawful procurement of Plaintiffs’
and the Class Members’ investments in the BitConnect Investments.

Plaintiffs and the Class Members are entitled to an award of attorneys’ fees pursuant
to Fla. Stat. § 517.211.
COUNT VII - VIOLATION OF FLORIDA’S
DECEPTIVE AND UNFAIR TRADE PRACTICES ACT,
CHAPTER 501, § 211(1), FLA. STAT. (“FDUTPA”)
Plaintiffs re-allege, and adopt by reference herein, Paragraphs 1 - 156 above, and further allege:

Chapter 501, Fla. Stat., Florida’s Deceptive and Unfair Trade Practices Act is to be
liberally construed to protect the consuming public, such as Plaintiffs and the Class Members in this
case, from those who engage in unfair methods of competition, or unconscionable, deceptive or unfair
acts or practices in the conduct of any trade or commerce.

Plaintiffs and the Class Members are “consumers” within the meaning of Fla. Stat. §
501.203(7).

By soliciting investor funds in the manner in which they did, Defendants engaged in
“trade and commerce” within the meaning of Fla. Stat. §501.203(8).

While FDUTPA does not define “deceptive” and “unfair,” it incorporates by reference
the Federal Trade Commission’s interpretations of these terms. The FTC has found that a “deceptive
act or practice” encompasses “a representation, omission or practice that is likely to mislead the
consumer acting reasonably in the circumstances, to the consumer’s detriment.”

The federal courts have defined a “deceptive trade practice” as any act or practice that
has the tendency or capacity to deceive consumers and have defined an “unfair trade practice” as any
act or practice that offends public policy and is immoral, unethical, oppressive, unscrupulous, or
substantially injurious to consumers.

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Moreover, as the securities laws are designed for consumer protection and “proscribe[ ]
unfair methods of competition, or unfair, deceptive, or unconscionable acts or practices,” a violation
of the securities laws is a per se violation of FDUTPA.

Defendants’ acts and omissions of representing to Plaintiffs and the Class Members
that, among other things:
(a) BITCONNECT utilized a proprietary, secret trading system
(the
“volatility software”) that helped its investors generate far-greater-than-
average returns on their investments;
(b) BITCONNECT’s guarantee of a one percent (1%) daily return on
investments would continue regardless of market performance or the
fluctuating value of bitcoin;
(c) Investment returns were legitimately generated and were not simply a
reallocation of new BITCONNECT investors’ money used to pay the
promised returns on outstanding BITCONNECT investors’ investments
in classic Ponzi scheme fashion;
(d) The BitConnect Investments complied with all applicable securities laws;
and
(e) The BitConnect affiliates who were paid commissions for their sale of
BitConnect Investments were properly registered to procure those sales
constitute both deceptive and unfair trade practices because the false representations and omissions
made by Defendants have a tendency or capacity to deceive consumers, such as Plaintiffs and the
Class Members, into investing in BITCONNECT’s falsely-touted business and are immoral, unethical,
oppressive, unscrupulous, or substantially injurious to consumers.

As a result of Defendants’ deceptive trade practices, Plaintiffs and the Class Members
were deceived into investing their money with a company that functioned solely as an engine of fraud
-- thus causing significant economic damage to Plaintiffs and the Class Members.

The materially false statements and omissions as described above, and the fact that
this was a misleading investment, were unfair, unconscionable, and deceptive practices perpetrated on

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  Plaintiffs and the Class Members which would have likely deceived a reasonable person under the
  circumstances.

Defendants were on notice at all relevant times that the false representations of
material facts described above were being communicated to prospective investors (such as Plaintiffs
and the Class Members) by their authorized agents.

As a result of the false representations and violations of the securities laws described
above, Plaintiffs and the Class Members have been damaged by, among other things losing their
invested capital.

Plaintiffs and the Class Members have also been damaged in other and further ways
subject to proof at trial.

Therefore, Defendants engaged in unfair and deceptive trade practices in violation of
Section 501.201 et seq., Fla. Stat.

Pursuant to Sections 501.211(1) and 501.2105, Fla. Stat., Plaintiffs and the Class
Members are entitled to recover from Defendants the reasonable amount of attorneys’ fees Plaintiffs
and the Class Members have had to incur in representing their interests in this matter.
COUNT VIII - FRAUDULENT INDUCEMENT
Plaintiffs re-allege, and adopt by reference herein, Paragraphs 1 - 156 above, and further allege:

Defendants, by acts of both omission and commission, made to Plaintiffs and the
Class Members false statements of material facts about the services Plaintiffs and the Class Members
would receive from BITCONNECT upon opening a BITCONNECT account and investing in the
BitConnect Investments.

Specifically, Defendants’ representations to Plaintiffs and the Class Members that,
among other things:

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  (a) BITCONNECT utilized a proprietary, secret trading system
  (the
  “volatility software”) that helped its investors generate far-greater-than-
  average returns on their investments;
  (b) BITCONNECT’s guarantee of a one percent (1%) daily return on
  investments would continue regardless of market performance or the
  fluctuating value of bitcoin;
  (c) Investment returns were legitimately generated and were not simply a
  reallocation of new BITCONNECT investors’ money used to pay the
  promised returns on outstanding BITCONNECT investors’ investments
  in classic Ponzi scheme fashion;
  (d) The BitConnect Investments complied with all applicable securities laws;
  and
  (e) The BitConnect affiliates who were paid commissions for their sale of
  BitConnect Investments were properly registered to procure those sales
  were false, and Defendants knew at the time the statements were made that the statements were false.

Defendants intended that Plaintiffs and the Class Members would be induced into
action by relying upon the statements of fact made to them by and on behalf of Defendants.

In considering whether to open accounts at BITCONNECT, invest in the BitConnect
Investments, and entrust to BITCONNECT their valuable assets; Plaintiffs and the Class Members
reasonably and justifiably relied on the statements of fact made to them by and on behalf of
Defendants.

As a direct and proximate result of Plaintiffs’ and the Class Members’ reliance on the
statements made to them by Defendants, Plaintiffs and the Class Members have suffered damage.
COUNT IX - FRAUDULENT MISREPRESENTATION
Plaintiffs re-allege, and adopt by reference herein, Paragraphs 1 - 156 above, and further allege:

Defendants, by acts of both omission and commission, made to Plaintiffs and the
Class Members false statements of material facts about the services Plaintiffs and the Class Members
would receive from BITCONNECT upon opening a BITCONNECT account and investing in the

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  SILVER MILLER
  11780 West Sample Road • Coral Springs, Florida 33065 • Telephone (954) 516-6000
  www.SilverMillerLaw.com
  
  Case 9:18-cv-80086-DMM Document 1 Entered on FLSD Docket 01/24/2018 Page 44 of 50
  BitConnect Investments in exchange for the fees they were compelled to pay to maintain accounts at
  BITCONNECT.

Specifically, Defendants’ representations to Plaintiffs and the Class Members that,
among other things:
(a) BITCONNECT utilized a proprietary, secret trading system
(the
“volatility software”) that helped its investors generate far-greater-than-
average returns on their investments;
(b) BITCONNECT’s guarantee of a one percent (1%) daily return on
investments would continue regardless of market performance or the
fluctuating value of bitcoin;
(c) Investment returns were legitimately generated and were not simply a
reallocation of new BITCONNECT investors’ money used to pay the
promised returns on outstanding BITCONNECT investors’ investments
in classic Ponzi scheme fashion;
(d) The BitConnect Investments complied with all applicable securities laws;
and
(e) The BitConnect affiliates who were paid commissions for their sale of
BitConnect Investments were properly registered to procure those sales
were false, and Defendants knew at the time the statements were made that the statements were false.

Defendants’ misrepresentations were made with reckless disregard for the truth.

Defendants intended that Plaintiffs and the Class Members would be induced into
action by relying upon the statements of fact made to them by and on behalf of Defendants.

In considering whether to open accounts at BITCONNECT, invest in the BitConnect
Investments, and entrust to BITCONNECT their valuable assets; Plaintiffs and the Class Members
reasonably and justifiably relied on the statements of fact made to them by and on behalf of
Defendants.

As a direct and proximate result of Plaintiffs’ and the Class Members’ reliance on the
statements made to them by Defendants, Plaintiffs and the Class Members have suffered damage.

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  SILVER MILLER
  11780 West Sample Road • Coral Springs, Florida 33065 • Telephone (954) 516-6000
  www.SilverMillerLaw.com
  
  Case 9:18-cv-80086-DMM Document 1 Entered on FLSD Docket 01/24/2018 Page 45 of 50
  COUNT X - NEGLIGENT MISREPRESENTATION
  Plaintiffs re-allege, and adopt by reference herein, Paragraphs 1 - 156 above, and further allege:

Defendants, by acts of both omission and commission, made to Plaintiffs and the
Class Members false statements of material facts about the services Plaintiffs and the Class Members
would receive from BITCONNECT upon opening a BITCONNECT account and investing in the
BitConnect Investments in exchange for the fees they were compelled to pay to maintain accounts at
BITCONNECT.

Specifically, Defendants’ representations to Plaintiffs and the Class Members that,
among other things:
(a) BITCONNECT utilized a proprietary, secret trading system
(the
“volatility software”) that helped its investors generate far-greater-than-
average returns on their investments;
(b) BITCONNECT’s guarantee of a one percent (1%) daily return on
investments would continue regardless of market performance or the
fluctuating value of bitcoin;
(c) Investment returns were legitimately generated and were not simply a
reallocation of new BITCONNECT investors’ money used to pay the
promised returns on outstanding BITCONNECT investors’ investments
in classic Ponzi scheme fashion;
(d) The BitConnect Investments complied with all applicable securities laws;
and
(e) The BitConnect affiliates who were paid commissions for their sale of
BitConnect Investments were properly registered to procure those sales
were false, and Defendants knew, or should have known, at the time the statements were made that
the statements were false.

Defendants had no reasonable grounds upon which to believe the statements were
true when made to Plaintiffs and the Class Members.

Defendants intended that Plaintiffs and the Class Members would be induced into
action by relying upon the statements of fact made to them by and on behalf of Defendants.

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  SILVER MILLER
  11780 West Sample Road • Coral Springs, Florida 33065 • Telephone (954) 516-6000
  www.SilverMillerLaw.com
  
  Case 9:18-cv-80086-DMM Document 1 Entered on FLSD Docket 01/24/2018 Page 46 of 50

In considering whether to open accounts at BITCONNECT, invest in the BitConnect
Investments, and entrust to BITCONNECT their valuable assets; Plaintiffs and the Class Members
reasonably and justifiably relied on the statements of fact made to them by and on behalf of
Defendants.

As a direct and proximate result of Plaintiffs’ and the Class Members’ reliance on the
statements made to them by Defendants, Plaintiffs and the Class Members have suffered damage.
COUNT XI - CONVERSION
Plaintiffs re-allege, and adopt by reference herein, Paragraphs 1 - 156 above, and further allege:

Plaintiffs transferred funds and assets to BITCONNECT for investment, and as a
purported loan, to participate in the BitConnect Investments.

BITCONNECT has kept Plaintiffs’ and the Class Members’ funds and assets after
Plaintiffs and the Class Members requested their return, despite BITCONNECT’s lack of any
ownership interest in the assets and despite BITCONNECT’s agreement in writing to return to
Plaintiffs and the Class Members -- in the form of fiat currency (i.e., U.S. Dollars or Euros), not
BitConnect Coins -- all of Plaintiffs’ and the Class Members’ holdings.

By refusing to return to Plaintiffs and the Class Members their assets, BITCONNECT
intended to interfere with, and indeed has interfered with, Plaintiffs’ and the Class Members’
ownership and interest in those holdings and has deprived Plaintiffs and the Class Members of their
property, permanently or temporarily.

Upon information and belief, BITCONNECT has utilized Plaintiffs’ and the Class
Members’ funds and assets to cover BITCONNECT’s own business expenses, to enrich its Directors
and shareholders, and to enrich its affiliates, including Defendants GLENN ARCARO, TREVON
JAMES, RYAN HILDRETH, CRAIG GRANT, CRYPTONICK, and JOHN DOE NOS. 2-10.

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  SILVER MILLER
  11780 West Sample Road • Coral Springs, Florida 33065 • Telephone (954) 516-6000
  www.SilverMillerLaw.com
  
  Case 9:18-cv-80086-DMM Document 1 Entered on FLSD Docket 01/24/2018 Page 47 of 50

As a result of BITCONNECT’s conversion of Plaintiffs’ and the Class Members’
funds and assets to its own corporate uses and the personal use of its Directors, shareholders, and
affiliates; Plaintiffs and the Class Members have suffered damage.
COUNT XII - CIVIL CONSPIRACY
Plaintiffs re-allege, and adopt by reference herein, Paragraphs 1 - 156 above, and further allege:

Defendants conspired with one another to perpetrate an unlawful act upon Plaintiffs
and the Class Members or to perpetrate a lawful act by unlawful means, to wit: they made multiple
misrepresentations of fact to Plaintiffs and the Class Members in an effort to extract from Plaintiffs
and the Class Members funds, assets, and cryptocurrency to fund BITCONNECT’s own business
expenses, to enrich its Directors and shareholders, and to enrich its affiliates, including Defendants
GLENN ARCARO, TREVON JAMES, RYAN HILDRETH, CRAIG GRANT, CRYPTONICK,
and JOHN DOE NOS. 2-10 not the purportedly legitimate purpose to which Plaintiffs and the Class
Members were told by Defendants that their investment assets were being applied - all of which put
Defendants’ own pecuniary interest ahead of Plaintiffs’ and the Class Members’ welfare and economic
safety.

Defendants solicited and/or accepted from Plaintiffs and the Class Members large
sums of funds, assets, and cryptocurrency while withholding from Plaintiffs and the Class Members
certain material facts, including:
(a) BITCONNECT did not utilize a proprietary, secret trading system (the
“volatility software”) that helped its investors generate far-greater-than-
average returns on their investments;
(b) BITCONNECT’s guarantee of a one percent (1%) daily return on
investments would not continue regardless of market performance or the
fluctuating value of bitcoin;
(c) Investment returns were not legitimately generated and were simply a
reallocation of new BITCONNECT investors’ money used to pay the
promised returns on outstanding BITCONNECT investors’ investments
in classic Ponzi scheme fashion;

• 47 -
  SILVER MILLER
  11780 West Sample Road • Coral Springs, Florida 33065 • Telephone (954) 516-6000
  www.SilverMillerLaw.com
  
  Case 9:18-cv-80086-DMM Document 1 Entered on FLSD Docket 01/24/2018 Page 48 of 50
  (d) The BitConnect Investments did not comply with all applicable securities
  laws; and
  (e) The BitConnect affiliates who were paid commissions for their sale of
  BitConnect Investments were not properly registered to procure those
  sales; and
  (f) The “BCC School” orchestrated by Defendant GLENN ARCARO was
  not a “school” at all; rather, it was a mere conduit to get BCC School
  “graduates” to open up accounts at BITCONNECT, for which GLENN
  ARCARO and his team of affiliates reaped from BITCONNECT the
  riches of each client referral.

All Defendants agreed to the illicit purpose for garnering investment monies from
Plaintiffs and the Class Members so that BITCONNECT’s Directors, shareholders, and affiliates
could enjoy lavish lifestyles with Plaintiffs’ and the Class Members’ funds, assets, and cryptocurrency.

Defendants were each aware of, and consented to, the misrepresentations detailed
above and knew that the efforts to garner funds, assets, and cryptocurrency from Plaintiffs and the
Class Members was all part of a fraud aimed solely at enriching BITCONNECT’s Directors,
shareholders, and affiliates without any intent to remunerate Plaintiffs and the Class Members in any
legitimate way purported by the BitConnect Investments.

In furtherance of their conspiracy, Defendants made to Plaintiffs and the Class
Members, or agreed to have someone make on their behalf, the false statements of fact detailed above
and purposefully withheld from Plaintiffs and the Class Members certain material facts detailed above
in a concerted effort to obtain Plaintiffs’ and the Class Members’ funds, assets, and cryptocurrency.

To fulfill their role in the conspiracy, the BITCONNECT corporate parties operated
the BitConnect Websites and pretended to be operating a legitimate, legally-compliant trading
exchange and lending platform.

To fulfill his role in the conspiracy, Defendant GLENN ARCARO managed, coached,
and supported a United States-based team of BITCONNECT affiliates to sharpen their recruiting
techniques and lure in BITCONNECT investors. Defendant GLENN ARCARO is also believed to

• 48 -
  SILVER MILLER
  11780 West Sample Road • Coral Springs, Florida 33065 • Telephone (954) 516-6000
  www.SilverMillerLaw.com
  
  Case 9:18-cv-80086-DMM Document 1 Entered on FLSD Docket 01/24/2018 Page 49 of 50
  have created and orchestrated the BCC School, which was little more than a conduit to get BCC
  School “graduates” to open up accounts at BITCONNECT, for which GLENN ARCARO and his
  team of affiliates reaped from BITCONNECT the riches of each client referral.

To fulfill their role in the conspiracy, Defendants TREVON JAMES, RYAN
HILDRETH, CRAIG GRANT, CRYPTONICK, and JOHN DOES NOS. 2-10 served as United
States-based BITCONNECT affiliates who used social media channels such as YouTube, Twitter,
and Facebook to recruit unsuspecting investors in the United States and abroad to purchase
BitConnect Investments. For their efforts, Defendants TREVON JAMES, RYAN HILDRETH,
CRAIG GRANT, CRYPTONICK, and JOHN DOES NOS. 2-10 were paid large commissions and
participated in a lucrative bonus program that provided them sizeable incomes.

BITCONNECT conducted no legitimate business -- something of which Defendants
GLENN ARCARO, TREVON JAMES, RYAN HILDRETH, CRAIG GRANT, CRYPTONICK,
and JOHN DOES NOS. 2-10 were aware and which they accepted as part of the scheme to defraud
BITCONNECT investors and accountholders, including Plaintiffs and the Class Members.

As a direct and proximate result of Defendants’ conspiracy, Plaintiffs and the Class
Members have suffered damage.
PRAYER FOR RELIEF
WHEREFORE, Plaintiffs CHARLES WILDES, FRANCISCO DORIA, ARIC HAROLD,
AKIVA KATZ, JAMES GURRY, and RONALD NELSON, individually and on behalf of all others
similarly situated, respectfully pray for relief as follows:
(a) A declaration from this Court that this action is a proper class action, including
certification of the proposed Class, appointment of Plaintiffs as the class
representatives, and appointment of Plaintiffs’ counsel as class counsel;
(b) An Order enjoining Defendants from making further transfers or dissipations
of the investment funds and assets raised in connection with the promoted

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  SILVER MILLER
  11780 West Sample Road • Coral Springs, Florida 33065 • Telephone (954) 516-6000
  www.SilverMillerLaw.com
  
  Case 9:18-cv-80086-DMM Document 1 Entered on FLSD Docket 01/24/2018 Page 50 of 50
  BitConnect Investments, or using such funds and assets in any further
  purchases or transactions;
  (c) A judgment awarding Plaintiffs and the Class Members equitable restitution,
  including, without limitation, rescission of their investments in
  BITCONNECT, restoration of the status quo ante, and return to Plaintiffs and
  the Class Members all cryptocurrency or fiat currency paid to Defendants in
  connection with the BitConnect Investments as a result of Defendants’
  unlawful and unfair business practices and conduct;
  (d) An award of any and all additional damages recoverable under law -- jointly and
  severally entered against Defendants
  -- including but not limited to
  compensatory damages, punitive damages, incidental damages, and
  consequential damages;
  (e) An Order requiring an accounting of the remaining funds and assets raised
  from Plaintiffs and the Class in connection with the BitConnect Investments;
  (f) An Order imposing a constructive trust over the funds and assets rightfully
  belonging to Plaintiffs and the Class;
  (g) Pre- and post-judgment interest;
  (h) Attorneys’ fees, expenses, and the costs of this action; and
  (i) All other and further relief as this Court deems necessary, just, and proper.
  PLAINTIFFS’ DEMAND FOR JURY TRIAL
  Pursuant to Rule 38 of the Federal Rules of Civil Procedure, Plaintiffs demand trial by jury in
  this action of all issues so triable.
  Respectfully submitted,
  SILVER MILLER
  11780 W. Sample Road
  Coral Springs, Florida 33065
  Telephone:
  (954) 516-6000
  By:
  DAVID C. SILVER
  Florida Bar No. 572764
  E-mail: [email protected]
  JASON S. MILLER
  Florida Bar No. 072206
  E-mail: [email protected]
  Counsel for Plaintiffs
  Dated: January 24, 2018
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  SILVER MILLER
  11780 West Sample Road • Coral Springs, Florida 33065 • Telephone (954) 516-6000
  www.SilverMillerLaw.com