The controversial cryptocurrency, Bitconnect, has once again landed in the spotlight for the wrong things. According to the company’s website, it has officially announced to shut its lending and exchange service following warnings from US State regulators.
Identifying Malicious Intent
Due to the announcement, the Bitconnect (BCC) price in USD plunged over 90 percent according to Coin Market Cap data. At press time, BCC is trading at $20.36, still a massive drop from its December high.
Bitconnect is an anonymously administered website that loans their token BCC to investors in exchange for a colossal return contingent on the time span of the loan. The Bitconnect news release read ,
“This is to inform all community members that we are closing the Bitconnect lending and exchange platform.”
Many crypto experts and enthusiasts have labeled Bitconnect a Ponzi scheme due to its generous multi-level referral feature – a suspicious program which guarantees up to 40 percent earned interest. Moreover, the company refers the coin as a coin-bearing asset that would earn coin holders an additional 120 percent return in a year. To tie it all up, the risk-free return rings too similar to a scam to be legitimate in the crypto space.
The platform informed readers and users alike that lending operations would close immediately, while the BCC exchange platform would close in 5 days. The company release read,
“We are closing the lending operation immediately with the release of all outstanding loans. With the 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. This rate has been calculated based on last 15 days averages of the closing price registered on coinmarketcap.com.”<
Michael Novogratz, vocal bitcoin supporter, and a wall street trader signaled bitconnect to be possibly a scam in November 2017. He tweeted “BitConnect really seems like a scam. [An] old school Ponzi [bad] actors hurt the community. period. #bitcoin #ether.”
Halting Some, but not All Operations
Bitconnect’s news release clarified the reasons to halt the lending and exchange platform. According to the company, the shutdown is due to the onslaught of “bad press” that has engendered a lack of confidence in the community. The other reason listed was the “two Cease and Desist letters” from North Carolina Secretary of State Securities Division and Texas State Securities Board.
Additionally, the company claims that the Bitconnect platform has continuously suffered DDoS attacks from external forces. The overall situation has created a state of panic in the community, hence becoming impossible for its administrators to continue operations smoothly.
However, the company pointed that it is not the end of Bitconnect. The Initial Coin Offering (ICO) for Bitconnect X will continue, and the company is developing another exchange for its token.
To the end, the news release mentioned, “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.”
Will Bitconnect be able to regain users trust in the future?