It can be seen that either a person or an organisation emerges as the target of internet humour. The internet has made it possible for wrongdoings or blunders committed by well-known individuals or companies to propagate quickly around the world, and bitcoin scams have become a new favourite in this area. A massive Ponzi scam that was operating inside the still-young company BitConnect was exposed in 2018, and the news rocked the internet for eternity. What was BitConnect, then, and where did it all go wrong? The answer to this will be given in the article and it will outline about BitConnect, which will allow you to know about it in more clarity. If you are interested in Bitcoin, you must know the Rules And Regulations.
Many found the entire concept of BitConnect to be strange from the beginning. Users of BitConnect’s lending platform might lend the equivalent in BitConnect coins and subsequently collect investment.
Even before the Ponzi scheme’s existence was made public, BitConnect’s employment of the trading bot was a contentious issue. This was odd since BitConnect was more interested in using users’ Bitcoin than its own to produce these ostensibly enormous returns. As a result, this coin relied entirely on another cryptocurrency to generate revenue.
The complete absence of a whitepaper was another peculiar aspect of BitConnect. In essence, a whitepaper is a study report or how-to guide that may be used commercially to inform or influence clients’ decisions regarding a firm.
Additionally, BitConnect was operated in privacy. While BitConnect had been in existence, no one was actually certain who had been backing it, unlike other major digital currencies.
To put it simply, this was all extremely uncommon to financial specialists and crypto veterans who understood what to look for or what to avoid.
Understanding The Growth Of BitConnect
Even though some individuals had a lot of misgivings about BitConnect, investors continued to make purchases. Because of their enormous return guarantees and daily incentives, many people thought that this organisation might make them billionaires.
As BitConnect gained popularity, more and more people started discussing it. This currency was promoted via YouTubers, Instagram influencers, and other successful people, which helped it soar online.
Knowing About Ponzi Scheme
Before we get into the basics of the Ponzi scheme, we will quickly review the specifics of the BitConnect fraud.
In essence, a Ponzi scheme is a fraud that deceives investors into believing they would earn large returns on their investments, but in reality, the perpetrators are merely utilising the money from earlier investors to pay fictitious returns to the following round of investors.
Charles Ponzi, an Italian con artist active in the late nineteenth and early to mid-twentieth centuries, is remembered by the name of this fraud.
Where BitConnect Failed To Work
Like many other significant cryptocurrencies in use today, BitConnect didn’t persist for too long. The Texas State Securities Board issued BitConnect an order to discontinue in Jan 2018, just under 2 years after the company was established. The board took this action because it was sure BitConnect was a Ponzi scheme. Additionally, BitConnect has failed to maintain transparency on user revenues, adding to the suspicions. Then, BitConnect formally ceased two weeks later.
Since BitConnect, a number of additional scams have been discovered, and new ones are constantly emerging. You must do the essential research if you ever want to invest in a cryptocurrency. Even if the currency is well-known or trustworthy, being aware of the risks and market patterns might save you from suffering a significant financial loss. All of us now have access to a new world due to cryptocurrency, but we must exercise caution.