BitConnect (BCC): The Rise And Fall Of The Largest Ponzi Scheme In Crypto History


Cryptocurrency is full of opportunistic schemers and scammers, fraudulent people who would do anything to knock off the unsuspecting public.

The entire crypto business has been variously labeled as a scam and risky endeavor, but none of the exit crypto schemes can possibly match the scale of BitConnect.

In one of the largest ever executed schemes, thousands of investors were left cursing themselves after the bubble burst on the Bitcoin investment platform.

On January 16, 2018, the BitConnect site announced that it was commencing shutdown of its services. The statement was posted on the platform’s website (it has since been pulled down) and read as follows:

“We are closing the lending operation immediately with the release of all outstanding loans,” the statement read.

“With the 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”

“In short, we are closing lending service and exchange service while website will operate for wallet service, news and educational purposes,”

Shock and confusion descended upon the crypto land, but should it have been like that? Not by a long shot, if anyone had cared to take note.

The reason is very simple: the investment had been termed a Ponzi scheme on numerous occasions. But despite obvious red flags, nothing happened until it all happened. So, how did all that happen? Here is a brief glance at perhaps crypto’s mega fraud scheme to date.

BitConnect: Rise, red flags, and fall

BitConnect entered the crypto scene after conducting its ICO in December 2016. It launched its own cryptocurrency under the ticker BCC and ran a cryptocurrency exchange for Bitcoin investors.

When it began trading, the coin quickly gained at price and reached values of over $400. It rose to boast of a market cap in excess of $2.6 billion.

Thanks to a suspect marketing strategy, the platform acquired a huge user base, growing even further. However, not everybody took it on its word, and detractors started raising alarm about it being a Ponzi scheme.

Red flags

One of the top signs that BitConnect was a Ponzi scheme comes from its elaborate marketing strategy.

Organized in different levels, the platform “loaned” users BCC and offered bonuses for those who helped bring more borrowers to the platform.

As such, what users earned in bonuses was equivalent to the number of new users they brought. Another red flag was the constant 1 percent daily interest on all investments. BitConnect promised users a 1 percent return on their investment.

What it means is that, regardless of what you deposited, the site gave you a 1% daily interest. It promised to turn investors into millionaires within a very short time.

For instance, if you deposited/staked $1,000, you’d have earned about $50 million in three short years. Despite being so obvious, this big NO sign eluded thousands of users who continued to invest.

One of the earliest people to see it as a red flag was Ethereum founder Vitalik Buterin. In reaction to the aggressive but ultimately unsustainable earning system, he tweeted:

“If [one percent per day] is what they offer, then that’s a Ponzi scheme.”

Legal hurdles mounted

BitConnect problems off the market mounted when authorities began to question its activities. Before the final stroke, the platform had run itself into a basketful of legal problems.

There was a letter from UK authorities asking those behind the company to cease and desist- threatening to take over the company’s assets.

Two more warnings were issued by the authorities in Securities departments from Texas and North Carolina. When problems mounted, close promoters of the investment started distancing themselves.

In short, the writing had been on the wall, only a few of its users saw it coming. Things were becoming hot and BitConnect founders devised a novel way of deflecting the attention.

They launched their own news outlet and effectively ensured that positive news continued to circulate despite the “bad press”. However, the mounting pressure still got to those behind the platform.

Market collapse

Immediately news of its closure reached the market, BCC/USD literally collapsed. From about $400 to the dollar, the coin crashed to about $30 within hours. Losing over 90 percent of value in a little over 24 hours meant the coin was fast becoming worthless.

The coin is still listed on CoinMarketCap and currently trades at $0.5. What it illustrated was that the crypto space is laden with risks and investors would do well to stay focused.

Authorities continue to warn the public and its possible BitConnect won’t be the last of Ponzi Schemes to emerge from crypto.

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