Bitconnect has been one of the biggest scams, in terms of sheer volume, that the cryptocurrency industry has ever seen. The company, Bitconnect, offered its investors high daily returns on investment. There have been many HYIPs (High Yield Investment Programs) like this before. But, none became as famous as Bitconnect. Thе company mаdе itѕ fоrау intо thе cryptocurrency ѕсеnе with аn initial coin оffеring (ICO) in late December 2016, ѕwiftlу cemented its position аѕ one of 2017’s bеѕt реrfоrming сurrеnсiеѕ оn CoinMarketCap. Indeed, during its heyday, BitCоnnесt boasted a market сар of оvеr $2.6 billion аnd a vаluе еxсееding thе $400 mаrk.
A glorified HYIP (High Yeild Investment Plan)
Bitconnect told investors that by buying BCC (Bitconnect Coin) they had 2 options
Lending meant that investors would have to lock in a certain amount for a certain period of time and every day of that lock-in period the investors would receive a certain percentage of ROI. At the end of the lock-in period, their initial investment, capital, would be paid back. Bitconnect also offered a certain fixed % bonus depending on the amount people invested.
Staking meant that investors had to download the Bitconnect QT wallet and hold their Bitconnect Coin there. They would then receive a certain % in interest as their earning. Bitconnect promoted staking for the purpose of maintaining the “security of the platform”
Here’s a chart of the returns promised by Bitconnect and the % bonus offered to investors in different levels.
Thiѕ meant that ѕаlting $1,000 аwау intо уоur Bitcоnnесt investment ассоunt соuld net you mоrе than $50 million within thrее уеаrѕ, аѕѕuming thе scheme dоеѕ indееd livе uр tо itѕ рrоmiѕе fоr оnе-реrсеnt intеrеѕt соmроundеd оn a daily bаѕiѕ.
Nееdlеѕѕ tо ѕау thоugh, mаnу dееmеd thiѕ mоdеl unѕuѕtаinаblе. Bitconnect claimed that the influx of funds was pumped into its trading bot that generated the company profits from which they paid their investors.
Well, here’s the thing. No one has ever seen ANY proof of this so-called Trading Bot and many believe that it NEVER EXISTED!
Amоng thе firѕt оnеѕ tо vоiсе hiѕ соnсеrn with the соmраnу wаѕ Ethеrеum fоundеr Vitаlik Butеrin
Despite these wаrningѕ, BitCоnnесt соntinuеd to рiсk up momentum.
The соmраnу rеliеd оn аn aggressive mаrkеting ѕtrаtеgу оn all fronts. Putting aside its extensive digitаl аnd event marketing еffоrtѕ, thе company hаd enlisted a large army of multi-lеvеl affiliate mаrkеtеrѕ to rесruit new invеѕtоrѕ, whо could thеn wоrk their way uр bу bringing in еvеn mоrе new investors – аnd ѕо оn and so оn. In the rеаl world, wе саll thiѕ a pyramid ѕсhеmе.
Bitconnect managed to fool its investors by telling them that their investment is used by the company’s Automated Trading Bot which makes a profit by harnessing the volatility of the cryptocurrency market to its advantage. This profit then gets distributed among the investors, different percentage for each, depending on how much money is invested.
Bitconnect pitched to its investors an investment program in which if they reinvested their earned money into the lending platform, the compounding effect of the total investment would grow their hundreds into thousands. This was amplified through social media blatantly by Shills (promoters) like Trevon james, Ryan Hildreth and Crypto Nick.
Bitconnect operated exactly like a pyramid scheme where investors were also offered a bonus for the investments that they brought in through new members. This is better known as a Multi-level Marketing Scheme (MLM)
The platform grew fast as thousands of people joined the Bitconnect wagon with hopes of earning quick money.
Within a few months Bitconnect claimed its spot on the top 20 cryptocurrencies in the industry with a market cap of $2.6 Billion!
The influx of new members owing to this “seemingly legitimate” lending platform was steadily increasing and nost investors were putting their profits right back in hoping their money will some day compound into hundreds of thousands and millions of dollars.
And then it happened.
Not suddenly, but slowly and steadily, with every move calculated very thoroughly.
The very first signs of Bitconnect’s exit plan were hinted by the unscheduled maintenance downtime of their platform/website on several occasions. Investors started raising concerns and skeptics started celebrating, as their predictions seemed to be coming true. However, a majority of the investors were still calm and confidant, owing to the positive words and reassurances of promoters like Trevon James, Ryan Hildreth and Crypto Nick.
A DDOS (distributed denial-of-service attack) is an attempt at rendering a server unreachable to its visitors. During a DDOS attack a website may become unreachable since the server is being flooded with bogus requests and cannot process the valid ones. Bitconnect claimed to be under such an attack and an excuse was provided to the visitors of the website.
Bitconnect claimed that the website was under a DDoS attack, presumably by competitors or hackers trying to break into the system to empty it and steal Bitcoins.
In order to keep things calm and still make the investors believe that everything will be okay they put up a message on the website.
Cease and Desist orders
In the midst of this rumors of Bitconnect being banned in several states (was only Texas and North Carolina, actually) started circulating and mass panic was created. Indeed, Bitconnect was banned in these states by law.
The Announcement and the Crash
Then the final blow was delivered. Many investors did not feel like this was the end. But it unfortunately was.
On January 16, 2018, BitConnect announced it would shut down its cryptocurrency exchange and lending operation after regulators from Texas and North Carolina issued a cease and desist order against it. Following was the announcement provided by Bitconnect on their website.
Following this announcement investors saw the value of the coin take a nosedive from $363.62 down under $50
Overnight, people lost thousands of dollars. There have been reports of suicides committed due to this news as some people couldn’t fathom the fact that their entire life savings, loan and borrowed money had just disappeared and they had lost everything!
BitconnectX to the rescue! Nooooooooot!
While Bitconnect kept blowing dust into investors’ eyes, a new plan had emerged. Welcome BitconnectX, an offspring of Bitconnect that claimed to be setting up an Exchange where Bitconnect Coin and other popular cryptocurrencies can be traded. The base currency, BCCX, was set at a ridiculous $50 per coin. Many deemed the ICO to be a bad idea and predicted that it would never be successful as no one would be willing to pay $50 per coin.
Well, think again. BitconnectX actually turned out to be Bitconnect’s final attempt to fleece its investors of whatever little they had remaining. Giving investors an opportunity to buy 3 BCCX tokens with a single BCC coin, Bitconnect managed to take whatever was left from their investors after the bloodshed. Needless to say, BitconnectX never took off, their customer support was nonexistent and nobody had any idea what was happening.
In the meanwhile, Founders of Bitconnect made off with Billions of Dollars and are in hiding.
Divyesh Darji, the man believed to be responsible for setting up the Bitconnect scam was nabbed recently, in august, in Dubai.
However, all investors still shoulder the loss as no payback has been made yet.
It is extremely important to DO YOUR OWN RESEARCH when it comes to investments. In the cryptocurrency industry, it is believed; more than 80% of ICOs that are launched are scams. If you don’t want to lose your hard earned money, it is YOUR DUTY to find out more about an ICO and dig deeper to analyze if it is legitimate or not. Taking the word of Shills and coin pushers is not the correct way to go![/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][stm_post_comments][/vc_column][/vc_row]