How BitConnect pulled the biggest exit scheme in cryptocurrency
How BitConnect pulled the biggest exit scheme in cryptocurrency
In a menacing turn of events yesterday, Bitcoin investment lending platform BitConnect abruptly announced it is shutting down its lending and exchange services. 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, which made its foray into the cryptocurrency scene 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 heyday, BitConnect boasted a market cap of over $2.6 billion and a value exceeding the $400 mark.
But despite its meteoric growth and burgeoning user base, the investment platform attracted a swarm of naysayers with its suspicious business model, which vocal critics repeatedly labeled a Ponzi scheme.
Guaranteed to earn investors up to 40 percent total return per month, BitConnect followed a four-tier investment system based on the sum of initial deposit – the more cash you put down, the bigger and faster profits you could rake in.
Regardless of the stake though, investors were promised a one-percent return of investment (ROI) on a daily basis. To this end, the company had developed its own proprietary “trading bot and volatility software” that would turn your Bitcoin investment into a fortune. Or so the information provided on the website suggested.
This meant that salting $1,000 away into your BitConnect investment account could net you more than $50 million within three years, assuming the scheme does indeed live up to its promise for one-percent interest compounded on a daily basis. Needless to say though, many deemed this model unsustainable.
Among the first ones to voice his concern with the company was Ethereum founder Vitalik Buterin. “If [one percent per day] is what they offer,” he said on Twitter back in November, “then that’s a [P]onzi [scheme].”
Despite these warnings, BitConnect continued to pick up momentum.
Indeed, the company relied on an aggressive marketing strategy on all fronts. Putting aside its extensive digital and event marketing efforts, the company had enlisted a large army of multi-level affiliate marketers to recruit new investors, who could then work their way up by bringing in even more new investors – and so on and so on. In the real world, we call this a pyramid scheme.
Other than “educating” prospective investors about BitConnect, the sketchy marketers engaged in copious amounts of blatant shilling for the dodgy investment platform and its BCC coin.
The tactic, which the promoters employed across multiple channels and social media platforms, essentially involved ballyhooing the Bitcoin investment service by touting screenshots of the impressive “profits” BitConnect has brought them; that is despite the fact that most of their winnings came from affiliates – not investing.
Still, BitConnect was thriving with this disingenuous approach, attracting hordes of naive backers willing to put down their money. Indeed, the ingenuity of this method became most apparent when the platform began facing its first legal troubles.
As one of the 20 biggest cryptocurrencies by marketshare, by that time the bullish investment service had expanded enough to attract the attention of the authorities. Following an investigation in November, the British Registrar of Companies served BitConnect with a strike-off notice, threatening to shut it down and dissolve its operation unless further action is taken.
“Upon dissolution all property and rights vested in, or held in trust for, the company are deemed to be bona vacantia, and accordingly will belong to the crown,” the filings read.
Within a week, the news had reached mainstream media, with numerous outlets reporting on the affair and thousands of spooked investors speculating about the implications on Reddit. This is when the promoter emergency task force stormed in, spewing all sorts of mindless crap to dispel this “fake news.”
In fact, TNW was the star of one of these videos, created by a promoter better known as Ryan Hildreth. Hildreth has since wiped the video from his own YouTube channel, but someone was thoughtful enough to save and re-upload it.
Source :
https://thenextweb.com/hardfork/2018/01/17/bitconnect-bitcoin-scam-cryptocurrency/
If this blog post has entertained or helped you to profit, please follow, upvote, resteem and/or consider buying me a beer:
BTC Wallet - 1QKuQJBa26X25qFbRKrRbvF9rUoNNKk9M1
ETH Wallet - 0xdc4938e16da57693d8bc1e8afa06dda4e1840e83
LTC Wallet - La4s5y1K2ViCTWMXcrfVNbHjXtgrVXwU7s