In the midst of a significant Cryptocurrency crash, Bitconnect (a Bitcoin lending and exchange platform) is closing down.
On its website, BitConnect stated it was “closing the lending operation immediately with the release of all outstanding loans”.
The BitConnect platform was intended to allow users to lend out Bitcoin to users using Blockchain technology, but many prominent members of the cryptocurrency community had long called out Bitconnect as a “Ponzi scheme”.
“From the surface,” said Charlie Lee, creator of Litecoin, “seems like a classic ponzi scheme. I wouldn’t invest in it and wouldn’t recommend anyone else to.”
I've been asked what I think about BitConnect. From the surface, seems like a classic ponzi scheme. I wouldn't invest in it and wouldn't recommend anyone else to.
I follow this rule of thumb:
"If it looks like a ????, walks like a ????, and quacks like a ????, then it's a ponzi." ????
— Charlie Lee [LTC] (@SatoshiLite) November 30, 2017
For their part, Bitconnect blamed the closure on “bad press” which created a lack of confidence in the product and the platform, but also made reference to cease and desist letters from the Texas State Securities Board and the North Carolina Secretary of State Securities Division.
“These actions have become a hindrance for the legal continuation of the platform,” mentioned the note on BitConnects website.
BitConnect’s own cryptocurrency, Bitconnect Coin, is still available for trade.
“Closing the lending and exchange platform doesn’t mean that we will stop supporting BitConnect coin,” Bitconnect explained. “Closing the lending platform will allow Bitconnect to be listed on outside exchanges giving more options for trading.”
The closure of the lending platform, as you might expect, has triggered a tremendous loss of value on the Bitconnect currency. In the midst of what has already been a catastrophic day for the cryptocurrency market, Bitconnect coin has plummeted by 87% in the last 24 hours and there doesn’t appear to be any let up in the decline for a currency that once traded at $US430 and now trades at $US33 after this news.