Following months of bad press and publicity, lending and exchange platform Bitconnect has announced that it is shutting down. Many had suspected the platform of being a Ponzi scheme, and it had suffered multiple DDoS attacks on the website.
In an announcement on its website, the platform said it was closing the lending operation immediately with the release of all outstanding loans. The notice cited continuous bad press, including two Cease and Desist letters from the securities boards of Texas and North Carolina.
Bitconnect has stated that it will refund all active loans at a rate which it calculated from the past 15 day average price.
With release of your entire active loan in the lending wallet we are transferring all your lending wallet balance to your BitConnect wallet balance at 363.62 USD. This rate has been calculated based on last 15 days averages of the closing price registered on coinmarketcap.com.
Within moments of the notice, the BCC token price plummeted from around $180 to $24 amid a general market decline across all cryptocurrencies.
According to TechCrunch, many users will still have suffered severe losses on their fiat, or Bitcoin equivalents, if they had invested in BCC, which is effectively useless now since the platform has shut down.
A number of prominent crypto experts have also labelled Bitconnect as a Ponzi scheme, including Ethereum co-founder Vitalik Buterin and Litecoin’s Charlie Lee who tweeted:
Turns out it was a ponzi after all. Sorry for those that got caught up in this. Ponzis work because people are easily fooled.
Bitconnect was an anonymously run operation that allowed users to loan their cryptocurrencies to the company for large returns of up to 40% per month. A large referral system generated a pyramid scheme on social media, with users plying their referral links for extra commissions.
The loans were in USD but had to be made in BCC, which could be purchased with Bitcoin. As its popularity grew, the token gained value and climbed from $10 in mid-2017 to a high of $435 at its peak at the end of the year.
Bitconnect has stated that they will continue supporting the coin:
Closing the lending and exchange platform doesn’t mean that we will stop supporting BitConnect coin. Closing the lending platform will allow Bitconnect to be listed on outside exchanges giving more options for trading. This is not the end of this community, but we are closing some of the services on the website platform and we will continue offering other cyptocurrency services in the future.
Although with the token’s value approaching the floor, renewed confidence and investment in BCC remains a very forlorn hope.
Did you use Bitconnect and has this affected you? Share your thoughts in the comments below.
Images courtesy of Pxhere and Bitcoinist archives.