BitConnect Ponzi scheme collapses, $2.4 billion wiped in 10 days
In what is believed to easily be the largest MLM cryptocurrency Ponzi collapse, earlier today BitConnect announced they were terminating ROI payments.
In a news post dated January 16th, BitConnet advised affiliates it was “halting” it’s lending and exchange platform.
For those unfamiliar with the company, BitConnect was the first MLM ICO lending Ponzi scheme.
BitConnect affiliates acquired BCC points from anonymous admins (or other affiliates), and then parked the points with the company on the promise of a daily ROI.
The “exchange platform” was an internal exchange BitConnect affiliates were able to cash out through, typically by selling their points to other BitConnect affiliates.
Rather than acknowledge they’d run out of money to pay affiliate ROIs with, BitConnect instead blamed “bad press”, the US government and DDOS attacks for its collapse.
The continuous bad press has made community members uneasy and created a lack of confidence in the platform.
We have received two Cease and Desist letters, one from the Texas State Securities Board, and one from the North Carolina Secretary of State Securities Division.
These actions have become a hindrance for the legal continuation of the platform.
Outside forces have performed DDos attacks on platform several times and have made it clear that these will continue.
These interruptions in service have made the platform unstable and have created more panic inside the community.
The reality is that had BitConnect of actually been deriving profits from a trading bot, as the anonymous owners claimed, points one and two would be a non-issue.
With respect to DDOS attacks, surely a company generating points with a market cap of $2.66 billion ten days could afford enterprise-level DDOS protection?
In the wake of BitConnect’s collapse, public trading of BCC points has plummeted to $30 to $40.
BCC points were always worthless but given they can’t be parked for a Ponzi ROI, the trading value between BitConnect investors is now expected to approach $0.
Ten days ago BCC was trading at $431 dollars. Today an adjusted market cap of just $224 million equates to $2.4 billion dollars wiped.
What this translates into as far as investor losses goes is unknown. Only BitConnect’s anonymous admins truly know how much money they received in exchange for BCC points.
If I had to guess, I’d estimate BitConnect investor losses to run between $500 million and $1.5 billion. $2 billion at a stretch but I’d be surprised.
Sadly going by public discussion of the collapse by BitConnect affiliates, a number of them appear to have been caught off-guard.
For those not just blindly investing however, there were plenty of warning signs leading up to BitConnect’s collapse.
- Texas issued BitConnect with a cease and desist on January 5th
- North Carolina issued BitConnect with a cease and desist on January 10th
- BitConnect’s top US investor Glenn Arcaro pulled a runner less than a week ago
- Shortly after Arcaro disappeared, BitConnect’s top YouTube promoters (all of whom are directly under Arcaro), simultaneously stopped promoting BitConnect and started deleting promotional videos
- in a blatant attempt to raise new investment, BitConnect launched the BitConnectX ICO
BitConnect’s website went down four days ago. The company claimed this was due to DDOS attacks, however it is far more likely BitConnect’s anonymous admins instead used this time to secure and transfer out what was left of invested funds.
Personally I felt the writing was on the wall after the Texas cease and desist hit.
BitConnect obviously had no trading bot to provide evidence of and far too much investment originating out of the US to ignore.
If they pulled a USI-Tech and cut off the US, there’d be riots and regulators would follow.
So instead it appears BitConnect’s admins took a few days to best cover their tracks, with affiliate funds held hostage under DDOS attack smoke and mirrors.
Ultimately there was no way to put off the inevitable, that BitConnect was paying out more than it was bringing in. Such is the fate of all Ponzi schemes.
No word yet on whether US regulators will pursue the matter. The SEC is believed to be investigating BitConnect and will no doubt receive a flood of complaints from victims.
Whether that escalates the hunt for BitConnect’s admins remains to be seen.
Oh, sure, now they pull the “we got hacked” gambit. Tsk, tsk, tsk. They couldn’t come up with something new to say, eh?
Just curious. Why do you think they did not do a FULL ON exit scam like all the others that have dissapeared?
They had so many chances to over the last year +. Just 4 days ago when the site was “Ddos” (if that is even true) attacked why didn’t they just run?
They could of taken ALL of the BTC sitting in everyone’s wallets and just ran. As well as not give back the BCC equivelant to current loan amounts (yes the BCC value dropped big but people can still recover some as there are still people buying BCC for some reason on exchanges? $30-$50 ish).
Why the constant updates from them when site was down and then now they will keep the coin/blockchain running and keep the BitconnectX exchange coming in a few months.
What is the point of this? They could of even taken all the new ICO money just raised, but they didn’t do that either.
Since they will likely get so many complaints anyways to the SEC, etc, why are they going about it in a seemingly “civil” manner. Just wondering your thoughts on that. Thanks =)
I’m thinking it’s tied to the BitConnectX ICO.
Either they let too much go in withdrawals (and then tried to cover it up with “we got hacked”), or the owners believe they’re untouchable enough to pull the same Ponzi scam again with BCCX points.
Bear in mind the BitConnect exit-strategy was on point for a Ponzi collapse. Suspend withdrawals and go dark for a few days, transfer what’s left, come up with scapegoats and then quietly make off with what’s left.
They’ve raised a few mill through BitConnectX, will be interesting to see how long that chugs on for.
Good points, makes sense. Time will tell with BitConnectX.. Thnx Oz =)
STOOPID people are too stupid to know they’re stupid, so they FALL ENDLESSLY for the next ‘bright shiny object’. I swear, this is much more entertaining than watching the ‘Jerry Springer Show’.
The Curse of the Cargo Cult Crypto Coin
I can’t believe the pimps trolling facebook trying to paint this as a “buying opportunity.” “Last week bitconnect coin was worth over $400 so go scoop them up sub $40.”
The Serial Scammer Bull Crap to English translator (it’s a Chrome extension) reads :”Everyone calm down and please someone buy my BCC.”
Bitconnect promises to keep trying to build an “ecosystem” for BCC and will provide API assistance for future merchants interested in accepting the coins instead of actual money.
Hey, maybe Bitconnect can strike a deal with OneCoin and share a merchant platform.
And for the record Bitconnect is not doing an “exit scam,” it’s a scam making an exit and there is a difference. “It’s paying me” is not and never will be proof something isn’t a scam. Bitconnect is every bit as much a scam today as it was the day it launched.
And another one bites the dust… Cue the music.
BitConnect scammers the subject of kidnapping and extortion?
moneycontrol.com/news/india/gujarat-bitcoin-case-complainant-booked-for-kidnapping-extortion-2572637.html/amp?__twitter_impression=true
Damn, that was pretty complicated to unravel.
Still not entirely convinced Satish Kumbhani is the owner of BitConnect. Hopefully they arrest him at some point and confirm.
I think Interpol red notices for BitConnect’s top brass are long overdue.
@Oz: Here’s a banger! YouTube listed as Defendant in BitConnect ponzi case:
google.com/amp/s/cointelegraph.com/news/youtube-added-as-defendant-in-class-action-lawsuit-against-bitconnect/amp
Ps. Surfing BMLM before on mobile was much more intuitive IMHO. Hopefully this is just a learning curve for me.
I empathise with these decisions you’re working through concerning UX, but so far, I’m lost. Keep up the good work, regardless.
Ps. If YOUTUBE is held liable, this could wipe all Onecoin videos off of YouTube for good. And presumably jobs will be created to address whistle blower and Consumer Protection Advocates concerns and petitions.
My fear is what (we) foresaw since (i) began following BMLM’s coverage of Onecoin in summer 2015: I hope this doesn’t throw a blanket over legit crypto projects.
…It’s why I fought against crypto scams since day one. This is the fallout and collateral damage I knew was coming, and which I HOPE Will be balanced.
We’ll see how this plays out.
Don’t think they’ll get YouTube but you never know. I’m hoping to work late tonight and be back on content tomorrow.
If the responsive design isn’t for you, most mobile browsers have a “show desktop” option on their settings menu. On my S7 Edge (Android) once I set that for a website it remembers the setting.