Bitconnect had a short history with a shady reputation. It is called officially the biggest scam in the cryptocurrency world after what they did recently. The company was launched with an Initial Coin Offering in 2016. Since the beginning it was suspected by the crypto community of being a Ponzi scheme. Well it turned out it really was and they ran off with almost a billion dollars of investor’s money.
The Bitconnect Scam
The recently closed cryptocurrency exchange and lending platform has offered investors to lend money to BitConnect so they can trade with them using some kind of trading software. Bitconnect promised investors an absurd flat percent return in any market condition plus up to 1% returns each day. These mathematically impossible and fairytale-like returns did not scare people. Some even took loanes and put in everything they’ve got. In order for users to participate they had to convert their Bitcoin or real money into the platform’s own Bitconnect (BCC) cryptocurrency.
The price of BCC was going well with a lot of interest and demand from naive investors. It reached highs of 430$ and was promoted by people with followings and Youtubers alike. Unfortunately for investors when the platform shut down, the coins became almost worthless. The scammer company promised to continue support for their coin so they do not maim investors so hard. But the promised support was as shady as the company’s name, because the only true value that the coin had was on the Bitconnect platform.
Unsurprisingly with the shutdown of the platform the cryptocurrency recorded a record decrease in price of more than 97% from the all-time high, falling from 430$ to a worthless 7$ as of writing this article. The market cap fell from 2.6$ billion to 66$ million, crippling the investors and losing their money.
Class action law suits against Bitconnect
Bitconnect shut down its exchange on January 17th, blaming regulatory changes, bad press and DDoS attacks, getting away with almost 1$ billion of investor’s money. The token plummeted with the platform. After closing its platforms Bitconnect has been hit with a class action lawsuit from six investors who claimed they have a combined loss of 770,000$.
The lawsuit was filed with the Southern District Court of Florida by a cryptocurrency fraud specialist, who represents the victims. Everyone who invested and suffered losses in Bitconnect’s platform and Ponzi scheme is encouraged and eligible to join the lawsuit as a Class Member. Let’s hope that more people join the lawsuit so there could be justice.
This Class Action lawsuit against Bitconnect lists twelve counts of criminal and civil violations. These include state and federal securities violations, fraud and selling unregistered securities, annulment of contract-based arrangements between investors and Bitconnect, deception, unfair trade practices, fraudulent inducement, fraudulent misrepresentation, civil conspiracy and unauthorized conversion (unauthorized use and control of someone’s property).
In the lawsuit are listed Bitconnect’s three corporate entities in the UK and a number of individuals as defendants. One of these people is Glenn Arcaro, the director of Bitconnect International, who recruited and promoted the scheme on social media platforms like Facebook and Youtube.
In the beginning of 2018 the Securities Commissioner of Texas and North Carolina accused Bitconnect of fraud and selling unregistered securities and filed a cease and desist order against the company.
Beware of scams and unrealistic promises
The way they pulled the scam gives the whole cryptocurrency community a bad reputation. They closed the exchange so you could not convert you BCC into Bitcoin or fiat. They lied that they will continue to support the project and the token. The same moment they closed the platform the price dropped instantly. But they did not tell anyone (perhaps only insiders) until the exchange was closed. This meant that investors are stuck with the BCC. The only way you could pull it out was to transfer it to an external exchange.
These exchanges were overwhelmed from the mass panic and had to go offline for a while. Thus investors could not exchange their BCC even if they wanted to. By the time these exchanges came back online, it was too late for investors. The token BCC was valued at 5$ per coin. Most of the people got back only 2%-5% of their investement. Furthermore most people were given deadline of 4-5 days to pull their money from the platform or they will be gone forever.
This will go down as the biggest scam of 2018 and maybe the biggest scam in the cryptocurrency world ever. I really hope that these people will be persecuted and there will be some kind of justice. Investor’s money are gone forever but let’s hope that a lot of jail time will be served for this injustice.
- Security Token Offering (STO) Guide: Everything you need to know about STOs - Feb 28, 2019
- Coinbase Pro is adding Ripple (XRP) support for trading - Feb 27, 2019
- Top ICOs of 2018: Initial Coin Offerings that beat the Crypto Bear’s market - Feb 26, 2019
- Ethereum hard forks Constantinople and St. Petersburg scheduled by the end of the week - Feb 25, 2019
- Ethereum founder and CEO, Vitalik Buterin revealed his non-Ether holdings and revenue sources - Feb 22, 2019
Know more than others on any Blockchain Party!
Join more than 5000 others to receive the breaking news and weekly summaries! No ICO spam, we promise.