BitConnect Officially Shuts Down — Ponzi Scheme Confirmed
Just one week after the proposed date of its initial coin offering (ICO), England-based financial startup BitConnect officially announced on its website that it is shutting down its cryptocurrency lending and exchange platform.
This decision was made following warnings issued earlier this month by regulators in Texas and North Carolina that the company was engaging in the sale of unregistered securities tied to a token sale.
“We have received two Cease and Desist letters, one from the Texas State Securities Board, and one from the North Carolina Secretary of State Securities Division,” the BitConnect team wrote. “These actions have become a hindrance for the legal continuation of the platform.”
The company also blamed ‘bad press’ coming from the Internet community that created a lack of confidence in the BitConnect platform.
What Happened to BitConnect
For those unfamiliar with the situation, the BitConnect platform has recently become a subject of controversy within the industry and was criticized by many high-profile figures including Ethereum co-founder Vitalik Buterin. Most of them would be inclined to agree that BitConnect is pretty much a pyramid scheme or scam.
These allegations aren’t without reasons either. The BitConnect platform’s multi-level referral system and promises of guaranteed risk-free returns on investment are often regarded as a red flag in the investment space.
How BitConnect Works
BitConnect was set up as an anonymously-run site where users could loan their cryptocurrency to the company in exchange for exorbitant returns depending on how long the loan was for. For example, a $10,000 loan for 180 days would supposedly give you approximately 40% in returns per month, with a 0.20% daily bonus.
The platform claims to have generated its returns using a trading bot and a “volatility trading software”, which usually averaged around 1% per day.
Bitconnect also had a multi-level referral feature that allows social media users drive up signups using referral codes.
Even the following quote can be found on the BitConnect website:
“The moment you acquire BitConnect Coin it becomes an interest-bearing asset with 120% return per year. It is that simple.”
It’s easy to see why people find it highly suspicious.
Ponzi Scheme Confirmed
The shutdown isn’t just the only sign that something iffy is going on with BitConnect. Some users are now reporting that they’re unable to cash in the BitConnect Coin (BCC) tokens, and many are directing their anger towards posters on forums and Youtube that advocated for BitConnect. Those who sent emails to BitConnect were also met with the silent treatment.
BCC Now Worthless
With the latest developments, the BitConnect Coin plunged by close to 90% in the last 24 hours. It started trading at above $400 in the beginning of the year to about $30 right now.
Source: coinmarketcap.com
If it is indeed true that token holders are not able to cash in, then whatever the value BCC is at could be meaningless. At this rate, it might as well hit zero to save the pain.