BitConnect

BitConnect is a defunct cryptocurrency exchange platform, cryptocurrency, and lending service. Founded in 2016 by Satish Kumbhani, BitConnect created a digital token called BitConnect Coin (BCC) that could be exchanged for bitcoin. BitConnect maintained a system of tiered accounts into which one locked bitcoin deposits for between 120 and 299 days. With the deposited bitcoin, one could buy BCC and lend it out again, earning daily interest. The more bitcoin one deposited the better the tier one was placed in, where better meant shorter lock-up and higher rates of interest. 
BitConnect's website indicated that it was targeted to an Asian clientele with sub-sites for Vietnam, South Korea, India, Indonesia, Japan, Thailand, Cambodia, and the Philippines. 
In response to prodding for a comment by the industry observer "Madoff wasn't on the blockchain" on Twitter, Ethereum founder Vitalik Buterin identified BitConnect as a likely Ponzi scheme. 
In October 2017 BitConnect's Carlos Matos, a BCC investor, made a speech that went viral on YouTube shortly after he gave a testimonial for the coin and the company at the BitConnect First Annual Ceremony in Thailand. The video can be found here. 
In July 2018, YouTube, which allegedly carried 70,000 hours of unedited content by and about BitConnect, was named in a class action lawsuit for negligence for not policing its content. 
On January 17, 2018, denying that it was closing down permanently, BitConnect announced on its website that it was immediately halting its lending operations and would shortly suspend trading of BCC on its exchange. It blamed two cease-and-desist letters, one from the Texas State Securities Board, and one from the North Carolina Secretary of State Securities Division, along with bad press as the cause of its problems.
BitConnect closed its exchange in January 2018 after receiving two cease-and-desist letters from state authorities for the unauthorized sale of securities and also suffering from denial-of-service attacks. As of October 4, 2018 the BitConnect website was live, although access to trading was not available. The site provided information about cryptocurrencies in general, bitcoin and BCC specifically, current industry news, and price information about BCC.
On February 20, 2019, the Federal Bureau of Investigation (FBI) posted a notice on its website inviting former investors of Bitconnect to reach out to the agency to help its ongoing investigation. The questionnaire required a first and last name, an email address, and a contact phone number.
BitConnect's founder, Satish Kumbhani, was the target of a civil case launched in May 2021. In September 2021, the U.S. SEC expanded on the civil case, suing Kumbhani over his alleged role in fraudulently raising about $2 billion from thousands of retail investors, in an offering that was not registered with the SEC. The SEC charged him with lying about BitConnect's ability to generate profits and violating registration laws meant to protect investors.
In a lawsuit in Manhattan federal court, the SEC also charged Glenn Arcaro, a promoter, and his firm Future Money Ltd with fraudulently receiving more than $24 million in "referral commissions" as BitConnect's top U.S. promoter. Arcaro pleaded guilty to a related criminal wire fraud conspiracy charge before a U.S. judge in San Diego. The allegations go back to January 2017, according to a complaint. BitConnect falsely told investors that it could generate monthly returns as high as 40% with its proprietary “volatility software trading bot” when no such strategy existed, according to the SEC.
==References==
Category: digital assets
Category: bitcoin
Category: cryptocurrency
Category: altcoins
Category: CryptoMarketsWiki