BitConnect (BCC), known as the Ponzi scheme platform, has announced that its closing its lending platform and cryptocurrency exchange. The decision has been taken because of different reasons, including a DDos Attack and legal problems with regulatory agencies in the United States.
BitConnect Scam: the Ponzi Scheme
BitConnect describes itself as an open source community that allows individuals to invest their wealth in a currency and earn a substantial interest. Several influential people have called BitConnect a scam and a Ponzi scheme. For example, Michael Novogratz has commented that BitConnect seems like an old school Ponzi.
BitConnect really seems like a scam. an old school ponzi … bad actors hurt the community. period. #bitcoin #ether
— Michael Novogratz (@novogratz) November 30, 2017
Vitalik Buterin, Ethereum’s founder, has commented about this topic as well. And Charlie Lee, Litecoin’s creator, said that it seems “like a classic Ponzi scheme.”
Anyone who doesn't yet agree with this should watch this video:https://t.co/mA2NxKlSQN https://t.co/k2YJvWMnzE
— Vitalik Non-giver of Ether (@VitalikButerin) December 1, 2017
I've been asked what I think about BitConnect. From the surface, seems like a classic ponzi scheme. I wouldn't invest in it and wouldn't recommend anyone else to.
I follow this rule of thumb:
"If it looks like a ?, walks like a ?, and quacks like a ?, then it's a ponzi." ?
— Charlie Lee [LTC⚡] (@SatoshiLite) November 30, 2017
BitConnect has promised 1% daily returns in some cases as one of the main benefits of joining the platform. Furthermore, the individual who invites more users to the platform, has different advantages compared to others. In order to be profitable it was needed to invite more users, making of BitConnect a Pyramid scheme too.
The company has written in a statement that due to several reasons it will close the BitConnect lending and exchange platform.
“This is to inform all community members that we are closing the BitConnect lending and exchange platform. We are closing the lending operation immediately with the release of all outstanding loans. With release of your entire active loan in the lending wallet we are transferring all your lending wallet balance to your BitConnect wallet balance at 363.62 USD.”
BitConnect explained that the continuous bad press created a lack of confidence in the platform. In addition to this, the company says that it has received two Cease and Desist letters from the Texas State Securities Board and the North Carolina Secretary of State Securities Division. That has created legal problems for the company.
The last reason that the company gives is regarding DDos attacks that it has suffered several opportunities. “These interruptions in service have made the platform unstable and have created more panic inside the community,” reads the statement.
BitConnect Coin has lost more than 95 percent of its value since the company released the statement. At the moment, it is being traded under $10 dollars, when it was available for around $400 some hours ago.
In the press release, the team explains that they will keep offering support for their currency. Besides that, BitConnect X ICO will keep working.
“BitConnect X ICO is still functional and we are building an exchange platform on the BitConnect X website. With BitConnect X operating as an exchange platform, BitConnect Coin (BCC) will be listed there. This is not the end of this community, but we are closing some of the services on the website platform and we will continue offering other cryptocurrency services in the future.”
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