On February 18, 2022, the United States Court of Appeals for the Eleventh Circuit unanimously reversed a district court’s dismissal of a putative securities class action against online promoters of a new cryptocurrency coin (the “Promoters”) for violations of Section 12 of the Securities Act of 1933 (the “Securities Act”). Wildes v. BitConnect Int’l PLC, No. 20-11675 (11th Cir. Feb. 18, 2022). Plaintiffs alleged that the cryptocurrency investment platform (the “Company”) that issued the new cryptocurrency was in fact a Ponzi scheme masquerading as an investment program, and that, as a result of the Company’s scheme, investors suffered more than $2 billion in losses. In moving to dismiss, the Promoters argued that using online media and videos to make their sales pitches to the public at large—rather than to specific individuals—could not amount to solicitation under the Securities Act. The district court agreed with the Promoters, dismissing the action with prejudice in November 2019. On appeal, the Eleventh Circuit reversed, holding that “[a] seller cannot dodge liability through his choice of communications—especially when the [Securities] Act covers ‘any means’ of ‘communication.’”
According to plaintiffs, the Company’s scheme utilized online promotional videos and websites, in which the Promoters sought to convince investors to purchase a new type of cryptocurrency on the promise of outsized returns with very little effort. The…
