In a major shock to supporters of virtual currencies, BitConnect, the first multi-level marketing (MLM) initial coin offerings (ICO) lending Ponzi scheme has collapsed wiping out almost USD 2.4 billion in just past 10 days, says a report.
According to a report from BehindMLM.com
, BitConnet has advised its affiliates that it was 'halting' it’s lending and exchange platform. "Rather than acknowledge they had run out of money to pay affiliate ROIs with, BitConnect instead blamed 'bad press', the US government and distributed denial of service (DDoS) attacks for its collapse," the report says.
About 10 days ago, Bitconnect Coin (BCC) was trading at $431. As on Wednesday, an adjusted market cap of just $224 million for BitConnect equates to $2.4 billion wiped in just 10 days. The report says, "In the wake of BitConnect’s collapse, public trading of BCC points has plummeted to $30 to $40. BCC points were always worthless but given they cannot be parked for a Ponzi ROI, the trading value between BitConnect investors is now expected to approach $0."
BitConnect affiliates were acquired BCC points from anonymous admins or other affiliates, and then parked the points with the company on the promise of a daily return on investment (ROI). The exchange platform was an internal exchange BitConnect affiliates were able to cash out through, typically by selling their points to other BitConnect affiliates.
In a post, BitConnect had stated "The continuous bad press has made community members uneasy and created a lack of confidence in the platform. 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. Outside forces have performed DDoS attacks on platform several times and have made it clear that these will continue. These interruptions in service have made the platform unstable and have created more panic inside the community."
BehindMLM says, the reality is that BitConnect had actually been deriving profits from a trading bot, as the anonymous owners claimed, issues like bad press and cease and desist letters would be a non-issue. "BitConnect’s website went down four days ago. The company claimed this was due to DDoS attacks, however it is far more likely BitConnect’s anonymous admins instead used this time to secure and transfer out what was left of invested funds," the report added.
Meanwhile, price of Bitcoin fell by more than 20% over the last 24 hours in major markets in Asia over fears of fresh restrictions in South Korea and China. According to the CryptoCompare website, Bitcoin was valued at an average price of 1,394 million yen ($12,562) in Japanese exchange houses on Wednesday, and 13,513 million won ($12,628) in South Korea.
The prices of the cryptocurrency -- that has been on a downward trend since the beginning of January indicates a fall of 22.7% in Japan and 24.14% in South Korea over the last 24 hours. Ethereum, another cryptocurrency, also fell more than 20%, whereas Ripple and Bitcoin Cash lost between 10% and 15% of its value.
The current price of Bitcoin is around 40% lower than the record high it touched in the middle of December, when its value had crossed $19,000.