BitConnect shuts down its lending and exchange platform – Was its service a scam?

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BitConnect has announced that its lending and exchange platform is shutting down. Many experts had been warning for months that BitConnect is a scam. The announcement was made in a blog post on their official website. According to the blog post, BitConnect will no longer work as the exchange and investment platform it once was and instead, it’ll work on things like news and education.

If you aren’t familiar with what BitConnect is, it’s an anonymously-run website where users can loan out their cryptocurrency tokens to the company in exchange for massive returns.

For example, a $10000 loan for 180 days could end up giving you $4000 returns per month! Those are outrageously high returns which is why it attracted a large amount of attention. The platform also claimed to give users returns of around 1% every day. This is why many crypto experts started calling this a Ponzi scheme.

With the announcement of shutting down the lending platform, all lending operations will be closed immediately and all outstanding loans will be released. “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 [sic].”

The rate, according to the people at BitConnect has been calculated using the average prices in the last 15 days at coinmarketcap. They also mentioned that they will be closing their BitConnect coin (BCC) exchange platform as well. Therefore if anyone has any BCC, it’s best if they withdrew them as soon as possible. The statement concluded: “In short, we are closing lending service and exchange service while website will operate for wallet service, news and educational purposes.”

If the official website link provided above is down for some reason, this Twitter post has a screenshot of the blog post.

According to the company, they will not completely disappear from the crypto scene as they will offer cryptocurrency services in the future. This comes as a surprise as it received a very bad reputation from many as well as cease and desist letters. The BitConnect X ICO will also remain functional despite the fact that it was named in a cease and desist letter served by the Texas Securities Board.

Although the BCC exchange platform will shut down, the coin itself will stay according to BitConnect. The coin will be available on other websites. The coin fluctuated in the mid 200’s (USD) in recent days. However, following the announcement the coin has dropped massively. In the last 24 hours, the coin went from $254 to $18.87, a massive 93 percent drop in value in just one day!

Image: coinmarketcap
Image: coinmarketcap

Many people lost thousands of dollars due to the closing of the platform. A lot of people also lost money because of the massive drop that BCC took. BitConnect blames the closing on “bad press”. However, BitConnect faced several legal issues and was never able to protect itself from online attacks. The press only discussed important issues such as the DDoS attacks and the legal issues.

In the months leading up to this eventual shutdown, BitConnect faced a lot of legal issues. It received multiple cease and desist letters, including one from the UK in November as well as two more this month from the US, one from Texas (already mentioned) and one from the North Carolina Securities Division.

Apart from that, promoters of the website started distancing away from it. The website itself also started facing server downtime issues, even now it’s not fully functional as it is down most of the time.

All the server and issues with promoters started after the cease and desist letters came in. This was bound to happen since no promoter wants to be associated with a website that has received multiple cease and desist letters.

The warning signs were there from the start as many people called it a scam. The website was doomed to fail eventually as more and more people started calling it a fraud. Many people lost a lot of money because of this. Perhaps a lesson can be learned from this to never come into the crypto market without doing proper research.

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