The U.S. District Court, Western District of Kentucky, has granted a temporary restraining order against BitConnect and frozen all its assets following a second lawsuit filed on Monday against the cryptocurrency exchange platform, CtyptoCurrencyNews reports.
The order requires that BitConnect disclose all the crypto wallet and trading account addresses as well as identities of anyone to whom BitConnect has sent digital currencies within the past 90 days.
“"This temporary restraining order is being entered without notice to Defendants to preserve the status quo and prevent irreparable harm until such time as the Court may hold a hearing," the document reads.
The most recent lawsuit, filed in Kentucky on behalf of every BitConnect investor, noted that Bitcoin (EXANTE: Bitcoin) and other cryptocurrency assets had been converted into BitConnect Coin (BCC) when the company announced the shutdown two weeks ago. BCC, which was trading at more than $300 at the time, now sits at around $9.
The plaintiff, Kentucky resident Brian Paige, filed the lawsuit on behalf of every investor in BitConnect.
“BitConnect scammed thousands of Kentuckians and hundreds of thousands of Americans out of millions and millions of dollars through a website called bitconnect.co,” the lawsuit claims.
The court found that the plaintiffs stood to lose any chance of recovering their funds if BitConnect's assets were not frozen, and that enforcing a TRO "is in the public interest because the public is interested in preventing massive consumer fraud and other securities violations."
Furthermore, the court sees that there’s a high likelihood of success on the plaintiffs’ side, noting the nature of the allegations and the existing arguments against BitConnect. BitConnect now has 10 days to comply with the order.
Earlier this month, BitConnect closed down its operations. The company listed reasons that included "continuous bad press" and DDoS attacks, as well as cease and desist letters from the Texas State Securities Board and the North Carolina Secretary of State Securities Division.