Bitconnect BCC Gets Operational Ban As Crypto Lending Ponzi Looms

Following the evoking of an Emergency Cease and Desist order by the Texas Securities Commission (TSC), Bitconnect’s operations have henceforth ceased. The writing has been on the wall for a considerable period, as numerous investors have had reservations on the company’s origin. Nonetheless, the firm had somehow gained massive traction, amassing an enormous market capitalization of $ 4.1 billion.

In a stern-worded press release, the TSC ordered the immediate halting of all business transaction conducted under the name of Bitconnect.  Furthermore, the letter elaborated that the affected company was an alien cryptocurrency– centered enterprise with a gigantic market share, amounting to over 4 billion dollars.

This is not the first time that Bitconnect is under the spotlight for wrong reasons, as numerous stakeholders have previously expressed concerns over the nature of the company’s demeanor. The company’s promises seemed far-fetched and unrealistic, and the latest happening affirms these worries.

The TSC order succinctly states that Bitconnect is enticing investors to its crypto-oriented project by promising to deliver 100% profits on a yearly basis. Bitconnect’s transactions obligate users to buy Bitcoins, the most popular virtual currency. Among its numerous programs, Bitcoin Lending programs raised eyebrows in particular. Here, clients purchase BTC and then relinquish control over them to a Bitconnect Trading Bot. According to the firm, the bot can generate up to 40% of profits per month.

Prominent personalities in the crypto sphere have also openly warned investors to keep off Bitconnect, as it is evidently a Ponzi scheme. Andreas Antonopoulos received nonstop ads on his YouTube channel, something that prompted his suspicions. Erik Voorhees was concise, labeling Bitconnect a scam. Jameson Lopp analyzed the wanting history of Bitconnect, citing the conspicuous absence of an operational timeline in the business’s Github repository.

The state of Texas has a reputation of strictly adhering to the law, and they got it right yet again.  By failing to comply with the local securities’ and investment by-laws, Bitconnect had no basis on which to lay their defense. However, the decision is open to appeal.

Bitconnect is not the first victim of an adverse ruling by the TSC, as Dubai-based mining investment firm USI-Tech suffered the same fate last year. The incessant amount of ICOs being advertised to citizens is perhaps what irked the regulatory board. The marketing campaign was so aggressive that it reached an annoying point, as all media from mainstream to social, were flooded with continuous promotion messages. To make matter worse, the agency has no official license to operate within the confines of the Texas state.

Bitconnect dug its grave by failing to conceal its core fundamentals and how it goes about its business. Heck, nobody knows the actual location of the company’s headquarters, which are purportedly in England. Regardless, the dubious undertakings of Bitconnect have spurred fire under the belly of regulators who have tightened the regulations and weeding out non-compliant institutions. However, in this process, a lot of legitimate projects are likely to inadvertently face the wrath of the law.