Business 10 months ago

Vince Dioquino

Investors call ‘Crypto-Wonderland’ BitConnect a Ponzi scheme

Cryptocurrency exchange BitConnect is embroiled in a legal battle with a group of investors who accused the company of operating a “wide-reaching Ponzi scheme.”

According the class action lawsuit filed at the federal court in West Palm Beach, Florida, BitConnect and its associated marketers promoted an idea which has “illogically promised” monthly returns of 40%, with a 1% compounding daily interest, disregarding market performance. The plaintiffs also claimed that “things at BitConnect weren’t what they seemed to be.”

However, the cease-and-desist letters that BitConnect received from the states of Texas and North Carolina only discontinued its lending platform, shutting down the alleged Ponzi scheme, leaving investors with unusable tokens as the coin crashed 90% of its average value, depreciating further as its own executives hastened its demise.

Claiming to have lost a total of $771,000 to BitConnect, the plaintiffs accused the company, its directors, as well as all its associates of violations of state and federal securities laws and deceptive trade practices, among other claims.

The investors compared BitConnect’s narrative to “Wonderland” a story based on Lewis Carroll’s Alice stories. Convinced that its fictive elements present a danger to the investing public, the plaintiffs said their goal was “to prevent the wrongdoers from simply turning off the lights and dancing away singing: ‘Ciao, baby, gotta run!’”

Signing for the litigation was David Silver, a Florida-based lawyer who specializes in cryptocurrency-related cases. The case dossier does not list any lawyer for BitConnect or any other defendants.

With the two states prohibiting BitConnect’s sale of securities, falsely led investors in the crypto scene quickly reacted with major sell orders, effectively abandoning the coin. As of writing, BitConnect’s market cap has dwindled from $2.6 billion to a mere $57 million, according to CoinMarketCap.com

Without a whitepaper describing its business structure in detail, the people involved with BitConnect’s shady business are reportedly on the run. Despite all these, the infringements done by BitConnect and its associates are not enough to make it stop, according to reports. After its announced shutdown, BitConnect is still operation, with an offshoot called BitConnectX holding an ICO reserved for U.S.-based buyers.

Other coins that appeared to improve as a result of the shutdown surfaced almost instantly in the crypto market. Scheming new ways to obscurely advertise a Ponzi scheme, Davorcoin (DAV) and other altcoins continued the same strategy employed by BitConnect: pose as lending platforms in which users may lock their funds for a certain time, and thereafter receive daily returns for doing so. Such opportunist overtones are often seen in recent forking frenzies over crypto, and the continuation of what is exactly the same Ponzi schemes is alarming.

With all the heat brewing in the crypto world, it’s best for new users, particularly, to place their trust on major networks like Bitcoin Cash whose stability and scalability has been proven by its passionate community backed by decentralized development. As the true remaining version of Satoshi Nakamoto’s vision for peer-to-peer digital cash, Bitcoin Cash is poised to take on the future.

Note: Tokens in the SegWit chain are referred to as SegWit1X (BTC) and SegWit Gold (SWG) and are no longer Bitcoin. Bitcoin Cash (BCH) is the only true  Bitcoin as intended by the original Satoshi white paper.  Bitcoin BCH is the only public block chain that offers safe and cheap microtransactions.
Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Satoshi Vision (BSV) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BSV is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.

COMMENT

Indian call center BTC fraud scheme preys on foreigners – CRYPTOTIMES.MOBI

[…] of the most high profile, BitConnect, has been labelled as a Ponzi scheme, after Divyesh Darji, one of its principal promoters, was arrested this […]

Your comment is awaiting moderation.

Indian call center BTC fraud scheme preys on foreigners | Bitcoin price media

[…] of the most high profile, BitConnect, has been labelled as a Ponzi scheme, after Divyesh Darji, one of its principal promoters, was arrested this […]

Your comment is awaiting moderation.

Brazilian crypto trading platform hacked, over 264000 user data leaked – BlockTrace.com

[…] and North Carolina that the crypto lending platform was a Ponzi scheme. Bitconnect had promised 1% compounding daily interest to users, making for 40% returns a […]

Your comment is awaiting moderation.

Brazilian crypto trading platform hacked, over 264,000 user data leaked – CRYPTOTIMES.MOBI

[…] and North Carolina that the crypto lending platform was a Ponzi scheme. Bitconnect had promised 1% compounding daily interest to users, making for 40% returns a […]

Your comment is awaiting moderation.

Brazilian crypto trading platform hacked, over 264,000 user data leaked | Bitcoin price media

[…] and North Carolina that the crypto lending platform was a Ponzi scheme. Bitconnect had promised 1% compounding daily interest to users, making for 40% returns a […]

Your comment is awaiting moderation.

Crypto market scam LeadInvest goes blind in Texas – CRYPTOTIMES.MOBI

[…] the cryptocurrency space. Just last month, the Texas board accused known cryptocurrency scam BitConnect of both fraud and selling unlicensed securities. The order led to the eventual downfall of the […]

Your comment is awaiting moderation.

Add a Comment

lastest news

Blockchain startup raises $24M for digital rights management

Business 11 hours ago

Blockchain startup raises $24M for digital rights management

Bluecoat, a blockchain company specializing in digital rights and royalties distribution, has already raised $24.25 million in funding, with notable personalities in the music industry assisting with the funding. In its press release, the company ...

Read More
Bitmain shuts down Israel office, leaving all 23 employees jobless

Business 12 hours ago

Bitmain shuts down Israel office, leaving all 23 employees jobless

After nearly three years of activity, Chinese crypto mining giant Bitmain is reportedly ceasing its Israeli operations this week. Citing sources familiar with the matter, Israeli news outlet Globes reported on Monday that Bitmain’s development ...

Read More
Warning: Scam site mimicking SVPool.com

Business 16 hours ago

Warning: Scam site mimicking SVPool.com

We're sending a warning to people in and out of the crypto industry. There is a website trying to cheat unsuspecting users looking to visit SVPool.com.  The individual or group is utilizing a common tactic ...

Read More