What is BitConnect
The Bitconnect scam - what exactly went wrong?
The BitConnect scam was pompously exposed in January 2018. Investors have lost over $ 1 billion. It is considered to be the biggest scam in the crypto scene to date. The media attention, the brazen scam and the gullibility of the investors are incomparable to date.
Read, be amazed and see for yourself!
Table of Contents
What was BitConnect?
BitConnect, abbreviation BCC, was a cryptocurrency that used the principle of the fraudulent pyramid scheme. You could lend your bitcoins on BitConnect. These were managed by the "BitConnect Bitcoin Trading Bot". In return, the lenders received a daily and extremely attractive interest rate. Usually the daily interest rate fluctuated between 0.3-4.0%.
So it said on the BitConnect website:
“As soon as you get BitConnect Coin (BCC) into possession, it becomes an interest-bearing asset with a 120% annual return. As simple as that."
After a predefined period of time, the investors received the interest rate and their stake back. Thousands of users followed this promise because it sounded too good to be true.
It was noticeable that no one was allowed to gain insight into the functioning of the trading bot. All information on the now deactivated homepage www.bitconnect.co was used for marketing and not at all for the functionality of the legendary bot.
How much money have BitConnect investors lost?
BitConnect had a market cap of $ 2.6 billion at its heyday in January 2018. The price for a BCC token was over $ 400.
Of course, market capitalization doesn't reflect the exact amount of investment in BCC. Experts estimate that around 1 billion US dollars have been invested directly in BitConnect.
How did BitConnect cheat?
With a pyramid scheme, the English "ponzi scheme". The high daily interest rates attracted investors in droves. Clever marketing as well as friend-refer-friend bonuses attracted further investors. BitConnect itself organized numerous seminars and conferences.
The newly deposited funds of the investors were used to pay off the high interest rates of the older members. At no time was there any economic surplus value created, only a reallocation of funds took place.
Pyramid schemes work up to a point in time. The zenith has passed if not enough new investors come in to pay off the interest rates and repayments. Exactly this point in time was reached with a bang at the turn of the year 2017/2018.
Investments in the pyramid scheme were only possible using their own BCC token. This token could be exchanged for Bitcoin, Ethereum, US dollars & Co. on numerous crypto exchanges and at BitConnect itself.
When interest rates and repayments were suddenly no longer paid and the BitConnect website was no longer accessible, many investors realized that they had to sell theirs to BCC. The backers of the system, however, were quicker and were able to sell their large positions before anyone else. This led to a flash crash. BCC lost over 80% of its value within a very short time - later everything (see graphic).
Who were the faces behind the scam?
Nobody knows exactly who the people behind it were. Divyesh Darji, an Indian man, was arrested in August 2018. He was considered one of the prime suspects in the fraud system.
John Bigatton is also associated with BitConnect. The Australian was considered a managing director for a certain period of time. Shortly after the fraud became public, his wife disappeared. She was later found dead. There is speculation in the crypto scene that deceived investors have taken revenge. There is still no solid evidence for this assumption.
The internet makes fun of BitConnect
BitConnect has appeared at numerous conferences and events. Often a certain Mr. Carlos Matos was responsible for a good atmosphere at these lectures. This gentleman was considered one of the faces of the BCC fraud case and was portrayed accordingly by the Internet community. See for yourself:
Numerous remixes were also created:
The face of Carlos Matos is often used in social media to the extent that fraud is discussed in the crypto world.
The promise of a very high return, in the shortest possible time, without risk - is a fairy tale. Neither companies in current business life nor in the crypto sector meet this premise. If this promise is backed up by clever marketing, usually in the form of friend-refer-friend systems, all alarm bells should ring.
The BitConnect fraud case was based on a pyramid scheme and was exposed in January 2018 with huge media coverage. The example should be a lesson to all gullible investors. Every business model must always be questioned and researched yourself before making an investment. Check our blacklist for black sheep before investing in cryptocurrencies or related projects.
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