Comment of the Day, @2xtops:

Bitconnect Collapses Overnight

Bitconnect published a post on its website on January 16 stating that the company is closing the Bitconnect lending and exchange platform. Since then, the market cap has dropped from $9.8 billion to $130 million. According to the company, the BitConnect lending service will be shut immediately with the release of all outstanding loans, while its exchange platform will be closed in 5 days. BCCOIN Chart.jpg

Bitconnect has attracted a lot of negative press over the last few months with many people calling it a ponzi scheme. In December, Ethereum founder Vitalik Buterin and Litecoin founder Charlie Lee, have spoken up against Bitconnect, calling it a ponzi scheme.

The premise behind Bitconnect is that you lend your bitcoin to the bitconnect volatility trading software that aims to average 1% per day. For new investors, this capital is locked up and you slowly receive the initial back. However, no evidence of this volatility trading software exists and it is thought that the returns from the software are actually generated by new members signing up and depositing bitcoin.


“We have received two Cease and Desist letters, one from the Texas State Securities Board, and one from the North Carolina Secretary of State Securities Division. These actions have become a hindrance for the legal continuation of the platform.”



Despite the obvious risks with investing in something like Bitconnect, there are always going to be some unsophisticated investors left holding the bags and one can only feel sorry for them:
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SEC Offers Guidance Amidst The Panic

The SEC has reposted a link to its guidance and warnings for potential cryptocurrency investors. With the crypto markets in steep decline, the retail traders are the ones getting burnt, and the SEC’s role as regulator is protecting consumers, not an easy task in this market.


Is the product legal?  Is it subject to regulation, including rules designed to protect investors?

Are the trading markets fair?  Can prices on those markets be manipulated?  Can I sell when I want to? Are there substantial risks of theft or loss, including from hacking?



These were just some of the pieces of advice offered, all sound suggestions but I fear not many retail investors will have taken heed. Instead, as with all over exuberant markets, greed takes over and clouds judgement.

Reddit user fiercebitcoin has been contacting exchange trying to withdraw his $34,000. However, they have refused to talk with the user and he is now seeking legal action. The situation currently is somewhat reminiscent of the 2014 MtGox scandal and the closure of would certainly push the cryptocurrency markets further down.


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Other users have come out in the thread explaining how they are in similar situations; one person has been waiting for over a month and still hasn’t received the 19,000 EUR. The current market crash is exposing the weakest links and it is likely that Bitconnect will not be the only casualty to be knocked out of the ecosystem.
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