Why is this scam
It was an open-source cryptocurrency which has been described as a high-yield investment program and as a Ponzi scheme. Bitcoin investment lending platform BitConnect suddenly announced it was shutting down its lending and exchange services in January this year. But while this sudden “curveball” might have come as a massive surprise for thousands of gullible investors, the writing was on the wall all along. The company, started with an initial coin offering (ICO) in late December 2016, swiftly cemented its position as one of 2017’s best performing currencies on CoinMarketCap. Indeed, during its peak BitConnect boasted a market cap of over $2.6 billion and a value exceeding the $400 mark.
But regardless its meteoric growth and prosper user base, the investment platform attracted a crowd of naysayers with its suspicious business model, which noisy critics repeatedly labeled a Ponzi scheme.
Everyone have been hearing rumours that BitConnect is a scam. Looking at BitConnect, it should be pretty clear that we were dealing with nothing more than a Ponzi scheme. People join the company by investing money and then that money provides them with an ROI.
The signs of confirmation
It’s impossible to tell who the owner was or where the registration took place in the world since it was done privately for domain bitconnect.co. There wasn’t a single word of background information available on BitConnect’s site, and this means that there’s no mention of when the company was founded, who owns it, where it’s physically based out of, etc. This platform is just an example of how you can recognize the scam. In a blog post titled “Changes coming for the Bitconnect system – Halt of lending and exchange platform” released on its official website, the company said that is “closing the Bitconnect lending and exchange platform.” The statement went on to suggest that BitConnect will now operate solely “for wallet service, news and educational purposes.” The website has since gone down. All this happened in January this year.
The company had signed a partnership with Blockchain Expo where it had its own stand in California, it attended the ICO EVENT conference in Amsterdam as a sponsor, and even hosted its own gaudy suit-and-gown gala night in Thailand. In fact, the last venue was where the notorious BitConnect meme was born.
Let’s see the other signs.
To give you a better perspective on the magnitude of damage BitConnect’s shifty business has caused to its thousands of investors, its site has been translated to several different languages, including Vietnamese, South Korean, Indian, Indonesian, Japanese, Thai, Cambodian and Filipino.
So why is it important to document the trickeries BitConnect resorted to? Because the signs were always there. While the Bitcoin investment platform is practically defunct now, it has inspired a slew of copycats – including EthConnect (based on Ethereum), XRPConnect (based on Ripple), and NEOConnect (based on NEO). It is also important to remember that its BitConnect X ICO continues to be active.
Ignoring the fraudulent tactics that made BitConnect the behemoth that it was is tantamount to risking falling victim to the same scheme again and we should do our best to avoid such traps.
Recommendation – It was the Ponzi Scheme in its essence.