Controversial Crypto Exchange Shut Down for Being a Ponzi Scheme

BitConnect was abruptly taken offline on Tuesday following multiple cease and desist orders in two U.S. states. North Carolina and Texas authorities have long suspected that the controversial crypto exchange has been designed as a Ponzi scheme from the very beginning.

According to Bloomberg, two top regulators in the said states warned BitConnect that it lacks a license to trade securities across the states. Regulators also noted that the exchange had been touted the operations as “safe” ways of earning big returns, but it has so far failed to provide investors with the necessary info about the algorithms powering the Trading Bot.

In response, the company complained that the “continuous bad press” had eroded the public’s trust in the platform. It also placed the blame on numerous “DDos attacks” that had weakened the platform and panicked the community. It assured users that the BitConnect Coin (BCC) could still be traded on other platforms.

An Exchange Run Like a Ponzi Scheme

BitConnect traders first needed to invest real money in BCC to access the platform. The company has long promised high returns if the loans were long-term enough. However, many analysts accused the platform of running a Ponzi scheme-like business by funding the big returns from new BCC investments from new users.

BCC has started shedding value this month and analysts expect a big crash just around the corner.

Tech Crunch reported that while the platform has been refunding older loans at $363.62 per BCC over the last 15 days, BCC is worth less than $40. So, many users have reported “severe financial losses” in lost Bitcoins or U.S. dollars. Most of the original investments were made in Bitcoins.

TNW confirmed that BCC’s value jumped to $425 about a week ago, but it is now hardly worth $30, and its value continues to plummet.
Image Source: Bitconnect.com

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When I was younger I used to spend almost all of my free time playing computer games. My mom and dad would go mental over this. “You’re never going to do anything with your life if you are going to play games all day” they used to say. What was even more unusual was the fact that I played more games than most of the guys in my friend group. Looking back, I have to admit that I probably played a bit too much, but I also learned a lot of great things. When I turned 20 I decided that it was high-time to make some money of my own, but the only jobs I could get were that of waitress or cashier. How exciting. After several excruciating months of serving tables I had a great idea: since I love gaming so much, why don’t I write about it? That’s when I started doing small writing projects on Elance. Eventually, I got an offer for a part-time job. During that time I learned all about content marketing strategies and how search engines work. I started writing about various topics such as technology, health and lifestyle and discovered that I was actually good at it. On November 24, 2014, I became part of the ArgyllFreePress team.