John Bigatton, the Australian promoter of BitConnect, has been convicted by the Sydney District Court of providing unlicenced financial advice contrary to s911B(1) of the Corporations Act 2001. He was released on a recognisance to be of good behaviour for three years.
BitConnect was a financial services business and online crypto platform which required investors to acquire BitConnect Coin (a crypto token) in order to participate in its investment opportunities.
Mr Bigatton provided unlicensed and unauthorised financial advice when he promoted BitConnect in Australia in seminars and on social media between August 2017 and January 2018.
In two of the seminars, Mr Bigatton told attendees that BitConnect Coins would increase in value to at least USD$1,000. At another, he stated words to the effect that, ‘BitConnect is better than any term deposit out there.’
This case is a reminder that many crypto assets are financial products under the current law and that services relating to them (including seminars and promotions) require an Australian financial services licence.
The matter was prosecuted by the Commonwealth Director of Public Prosecutions following a referral from ASIC.
BitConnect offered investment opportunities through its website, including a financial product known as the Lending Platform. The Lending Platform was promoted as an investment opportunity and in order to participate, investors were required to acquire BitConnect Coins.
Investors could invest or ‘loan’ BitConnect Coins for fixed terms in exchange for promised high interest rates. Investors did not control their loans once invested, nor could they withdraw their capital investment until the expiry of the lending period.
On 11 December 2018, ASIC successfully applied to the Federal Court to freeze Mr Bigatton’s assets, including his crypto assets. The total value of assets frozen was in the millions. This was the first time ASIC obtained freezing orders over digital assets. ASIC’s proceedings were discontinued in March 2020 and proceedings were commenced by the Australian Federal Police who obtained freezing orders over Mr Bigatton’s property under the Proceeds of Crime Act. These proceedings remain ongoing in the Supreme Court of New South Wales.
As a result of his conviction, Mr Bigatton is disqualified from managing corporations for five years.
On 1 September 2020, ASIC banned Mr Bigatton from providing financial services for seven years.
Mr Bigatton was charged over his conduct in relation to BitConnect in November 2020. He pleaded guilty to one count of providing unlicensed financial advice contrary to section 911B(1) of the Corporations Act on 16 May 2024.