What happened to bitconnect
By: Doyin Olarewaju
Tags: Bitcoin, Ponzi Scheme, Bitconnect, Charlie Lee, Vitalik Butterin

What Went Wrong

It started with Vitalik Butterin and Charlie Lee (founders of Ethereum and Litecoin) raising their concern over Bitconnect being a ponzi scheme and it seems their predictions have come true.

Cease and Desist

November 2017, Bitconnect got a cease and desist order from the United Kingdom, threatening to seize its assets and stop its operations unless Bitconnect can clear up the several issues regarding its operations and existence.

In just a matter of weeks Bitconnect received two more cease and desist from Texas and North Carolina Security boards. There where several accusations leading to the cease and desist, among which are

Misrepresentation of the risk involved in investing on the platform

Failure to disclose facts about the company and founders

No legitimate affiliate program for its promoters (and there has been a lot of them)

Image credits. The next web

According to the cease and desist orders, there are a lot of inaccuracies when it comes to who started and registered Bitconnect and also about who operates it. It was found that Bitconnect was registered by a British National named Fitzsimmons, who also holds 75% shares in the company but his name doesn’t appear anywhere on the website. Fitzsimmons just appears to be a name with no Internet presence nor pictures to prove he truly exists, the folowing excerpt is all we where able to find on him.

Mr Ken Fitzsimmons Uk (British) Business Owner, Born in May 1978 (39 years old)

14 Jul 2016 → Current

Is the owener of:

Bittconnect LTD 10278342

The Panorama

Park Street

Ashford

England

TN24 8EZ

Furthermore, the office building listed by Bitconnect appears to be just a shared office space, which makes disappearing much easier.

Another case of lack of transparency is that of Bitconnect promoter Glenn Arcano, who was listed as director in the company. Arcano however claimed that the registration is false, but that didn’t stop him from promoting Bitconnect. These coupled with the lack of transparency about the risk involved was why cease and desist letters where served from several quaters.

Continuous DDOS Attacks from Hackers

Denial of service attacks aka DDos attacks where also frequent on the Bitconnect platform. DDos attack is a technique that hackers use to prevent users from accessing a particular website by sending multiple requests that use up the website’s resources.

The DDos attacks was another area where the Bitconnect team was shady. The official Bitconnect twitter account claimed it was under DDos attacks while the website itself claimed it was undergoing maintenance. Misleading right ?

Promoters Abandoning Ship

In the wake of all the drama, what put the final nail in the coffin was the fact that the open Bitconnect advocates started distancing themselves from the platform one after the other.

Glen Arcano who had numerous promotional content on his channel about Bitconnect suddenly deleted all videos from his channel. Craig Grant another promoter has seized promoting them till further notice. Trevor James a popular Youtuber has also stopped promoting Bitconnect, it was also reported that he had a mental incident recently amidst news of him going to jail.

Why this feels like the final nail in the coffin is that if truly Bitconnect isn’t a scam like the company claims and it only started having issues due to bad/false news being spread, the promoters should have been the ones to get ahead of the story and spread the truth due to the influence they hold with people.

So what Happens Now

Bitconnect made a blog post recently about the changes coming to the platform on it’s website. The post stated that lending services will be shutting down and Bitconnect will henceforth be a wallet, news and educational service.

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

Despite the fact that the website claims that funds will be distributed, investors have not been able to withdraw funds till now (Another shady affair from Bitconnect, Oh what a surprise). Several investors are still hoping this changes.

In Conclusion

A lot of people where heavily invested and haven’t been able to withdraw their investments

All indications show that Bitconnect was indeed a Ponzi Scam. The only ones that profited from it in the end where the early investors, the promoters and the owners.

What investors should have asked themselves before investing is that, If someone had a working formula that had almost no risk and it gave back as much as 1% return on interest in a day like Bitconnect did, why wouldn’t they keep this to themselves and make themselves very wealthy. Why wouldn’t they build pioneer this incredible method and only licence it’s usage rather than collect bits and pieces from investors all over the world.

The Bitconnect scheme is looking as good as dead. The only thing investors can do now is learn from it and hope they get their money back. In the words of Charlie lee, If it looks like a duck, walks like a duck and quacks like a duck, then it’s a ponzi. There is no investment without risk.