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According to media reports, Bitconnect, a longtime lender and trading platform that many have suspected of being Ponzi schemes, is now announcing its imminent closure.
Bitconnect said in a statement on its Web site that the closure of the platform was due to “constant negative news” and received letters from the Securities Commission in Texas and North Carolina that the platform was out of operation, The platform also continues to suffer from DDoS attacks.
Although the financing platform said they will refund all loans for a price of $363.62, the average price of tokens over the past 15 days, the Bitconnect token currently trades below 80% and is worth less than $40. So while users may already have redeemed all their cryptocurrencies ahead of schedule, there are certainly many people who suffer serious economic losses in terms of dollars or bitcoin, which is their original investment.
Many cryptocurrency communities have publicly accused Bitconnnect of operating a Ponzi scheme, including Vitalick Butlin, founder of the Ethernet site.
Bitconnect By issuing a cryptocurrency called BCC (not to be confused with BCH or Bitcoin Cash) it basically does not make any sense now that the trading platform is closed. Finally, the price of the token dropped more than 200% to just over 37% a few hours ago, by more than 80%.
Bitconnect is an anonymous website where users can lend their encrypted currency to companies for huge returns, depending on the duration of the loan. For example, a loan of $ 10,000 for 180 days is said to give a 40% return to the user each month and a 20% bonus daily.
Bitconnect also has a thriving multi-tier referral feature that also makes it somewhat similar to a pyramid structure where thousands of social network users are trying to use their referral code to drive new user signups.
There we go. It's over with bitconnect pic.twitter.com/Bt5Eu5km4c
— Shitcoin minimalist (@bccponzi) January 16, 2018
The platform said it uses the Bitconnnect trading robot and Volatility Trading Software to generate rewards for users, averaging about 1% daily.
Of course, profiting from market volatility and capriciousness is a legitimate trading strategy that many hedge funds and institutional traders are using. But the amount Bitcoins promised (and paid), along with the number of guaranteed returns, convinced many that it was a Ponzi scheme that used new mortgages to pay off existing loan interest.
The chart below will determine the number of users using the platform.
All Bitconnect loans are denominated in U.S. dollars but must be traded on BCC, the platform’s native cryptocurrency. As a result, borrowers must deposit bitcoin into the platform and then convert bitcoin to BCC at market rates. Loan interest and principal are only paid in the BCC. This means that after the term of the loan has expired, the user will have to convert it back to bitcoin (or USD).
The BCC’s participation in the loan program has led to a natural increase in demand (and price) for the BCC. In less than a year, the value of this cryptocurrency rose from less than a dollar (in millions) to its highest ever $430 with a market capitalization of more than 260 million U.S. dollars.
But for now, its price may continue to fall for no other purpose. The company did say that the ICO for their Bitconnect X trading platform will continue and the BCC cryptocurrency trading will continue there.
Reference: thenextweb
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