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Wikipedia

Bitconnect

Bitconnect (also spelled BitConnect and KimConnect; stylized bitconnect, ticker code BCC) was an open-source cryptocurrency in 2016–2018 that was connected with a high-yield investment program, a type of Ponzi scheme.[2][3][4] After the platform administrators closed the earning platform on January 16, 2018, and refunded the users' investments in BCC following a 92% coin value crash, confidence was lost and the value of the coin plummeted to below $1 from a previous high of nearly $525.

Bitconnect Coin
Bitconnect logo
Denominations
CodeBCC
Development
Original author(s)Satish Kumbhani
Initial releaseFebruary 15, 2016[1]
Development statusDiscontinued
Written inC++ C#
Operating systemWindows, OS X, Linux, Android, iOS
Source modelOpen source
LicenseMIT License
Ledger
Timestamping schemeProof of stake/Proof of work (hybrid)
Block reward0.42% every 15 days; 10% inflation per year
Block time60 seconds
Website
Websitebitconnect.co ()

History edit

Bitconnect was released in 2016 to allow users to lend the value of Bitconnect Coin in return for interest payments. The marquee program was the so-called lending platform where users traded Bitcoin for Bitconnect Coin and could lock in the instantaneous value of the coin for a set period of time while earning interest calculated daily. The interest payouts were determined by a so-called "trading bot". The trading bot was the most controversial piece of the Bitconnect.co system.[citation needed] The liquidity of the BCC cryptocurrency funded users' ability to exchange their earnings for Bitcoin.

On November 7, 2017, the government of the United Kingdom issued Bitconnect a notice with two months to prove its legitimacy.[1][5]

On January 3, 2018, Texas State Securities Board issued a cease and desist to the company, calling it a Ponzi scheme, and citing failings in user earnings transparency, and misleading statements.[1] Texas State Security Board and North Carolina Secretary of State Securities Division warned that Bitconnect was not registered to sell securities in their respective states.[1]

On January 17, 2018, Bitconnect shut down,[3][1] and BCC prices crashed by 92% immediately after.[6] Bitconnect announced it would refund its loans.[7]

On January 31, 2018, a temporary restraining order froze Bitconnect's assets, expiring on February 13.[8] However, Bitconnect as an entity never actually existed, so it is unclear what assets Bitconnect has (or ever had). An alleged India-region leader (one level below the founder) of Bitconnect, Divyesh Darji, was arrested in Delhi, India, on August 18, 2018.[9] It is suspected that Darji is connected to well-known criminal entities involved in laundering so-called "Black Money" after the Indian government's demonetization of the rupee. In 2019, Darji was arrested and released on bail in connection with a similar scam called Regal Coin.[10]

Criticism and collapse edit

Bitconnect was suspected of being a Ponzi scheme[11] because of its multilevel marketing structure and impossibly high payouts (1% daily compounded interest).[6][7][12] Bitconnect interest fluctuated greatly with the volatility of Bitcoin, which its value was tied to.

The Bitconnect Coin was among the world's top 20 most successful cryptocurrency tokens[13] until its price collapsed after traders began losing confidence. BCC rose from a post-ICO price of $0.17 to an all-time high of US$463 in December 2017; it declined to US$0.40 as of March 11, 2019. Bitconnect released outstanding loans at US$363.62 to the Bitconnect Wallet in the form of BCC. However, soon after that news the internal exchange price and liquidity collapsed resulting in a nearly complete loss of value.[7][14][15]

Legal issues edit

On January 16, 2018, Bitconnect announced it would shut down its cryptocurrency exchange and lending operation after regulators from Texas and North Carolina issued a cease and desist order against it.[16][17][18][19] On January 31, 2018, a U.S. District Court, Western District of Kentucky, granted a temporary restraining order freezing Bitconnect's assets and "to disclose cryptocurrency wallet and trading account addresses, as well as the identities of anyone to whom Bitconnect has sent digital currencies within the last 90 days".[citation needed]

In September 2021, the U.S. Securities and Exchange Commission sued Bitconnect, alongside its founder Indian Satish Kumbhani, American Glenn Arcaro who served as Bitconnect's lead national promoter in the United States from August 2017 to January 2018, and Future Money LTD, a company Arcaro created to lure into Bitconnect's lending program. The SEC alleged that Bitconnect defrauded U.S. investors a total of $2.4 billion.[20][21][22][23]

Parallel to SEC civil charges, the United States Department of Justice had initiated criminal charges against Arcaro. On September 1, 2021, Arcaro pleaded guilty of criminal charges pressed by DOJ which includes conspiracy to commit wire fraud and criminal forfeiture.[24] The DOJ also indicted Kumbhani on various federal charges in February 2022, including money laundering and fraud.[25]

On January 12, 2023, a federal district court in San Diego ordered that Arcaro pay $17 million in restitution to be distributed to approximately 800 victims. [26] He also agreed to forfeit more than $24 million, which could also be used in the future to repay victims. [27]

Internet meme edit

On October 28, 2017, Bitconnect held its first (and only) annual ceremony in Pattaya, Thailand. During the event, an investor named Carlos Matos from New York City gave an exuberant presentation and testimonial about the website, which included him intensely screaming "Bitconnect!" several times in a variety of registers;[28] this quickly became an Internet meme. Both the internet meme and the questionable practices of Bitconnect were profiled by John Oliver and Keegan-Michael Key on the program Last Week Tonight.[29]

See also edit

References edit

  1. ^ a b c d e "What is BitConnect (BCC) and how does it work?". Finder.com. January 2, 2018. from the original on January 25, 2018. Retrieved January 30, 2018.
  2. ^ Mix (January 17, 2018). "How BitConnect pulled the biggest exit scheme in cryptocurrency". The Next Web. from the original on January 31, 2018. Retrieved January 30, 2018.
  3. ^ a b Wieczner, Jen (January 17, 2018). "Bitcoin Crashes to Below $10,000 as Cryptocurrency Scams Scare Investors". Fortune. from the original on January 27, 2018. Retrieved February 10, 2018.
  4. ^ "Seeking Victims in Bitconnect Investigation". Federal Bureau of Investigation. Retrieved January 4, 2021.
  5. ^ "BITCONNECT LTD - Filing history (free information from Companies House)". beta.companieshouse.gov.uk.
  6. ^ a b Williams, Sean. "BitConnect, Alleged Crypto Ponzi Scheme, Shutters Its Lending and Exchange Services and Plunges 92%". The Motley Fool. from the original on January 18, 2018. Retrieved January 18, 2018.
  7. ^ a b c Tepper, Fitz. "Bitconnect, which has been accused of running a Ponzi scheme, shuts down". TechCrunch. from the original on January 18, 2018. Retrieved January 18, 2018.
  8. ^ "SEC.gov | BitConnect, et al". www.sec.gov. Retrieved December 23, 2023.
  9. ^ Osborne, Charlie. "Alleged head of BitConnect cryptocurrency scam arrested in Dubai - ZDNet". ZDNet. Retrieved October 27, 2018.
  10. ^ "Bitcoin millionaire 'on the run' after second cryptocurrency scam". Independent.co.uk. June 5, 2019.
  11. ^ Popper, Nathaniel; Bowles, Nellie (2018). "Bitcoin Falls Below $10,000 as Virtual Currency Bubble Deflates". The New York Times. ISSN 0362-4331. from the original on January 18, 2018. Retrieved January 18, 2018.
  12. ^ Cheng, Evelyn (January 17, 2018). "Digital currency plunge may be healthy for cryptocurrency market". CNBC. from the original on January 18, 2018. Retrieved January 18, 2018.
  13. ^ Williams, Sean (July 20, 2017). "The 20 Largest Cryptocurrencies by Market Cap". The Motley Fool. Retrieved June 22, 2018.
  14. ^ "Changes coming for the Bitconnect system - Halt of lending and exchange platform". BitConnect. January 16, 2018. from the original on January 18, 2018.
  15. ^ Bhargav, Sushant (January 16, 2018). . TechScoop.in. Archived from the original on January 18, 2018. Retrieved January 18, 2018.
  16. ^ McKay, Tom (January 17, 2018). "BitConnect, Anonymously-Run Crypto Exchange, Crashes After States Issue Cease and Desists". Gizmodo. from the original on January 17, 2018. Retrieved January 17, 2018.
  17. ^ Kharif, Olga (January 16, 2018). "BitConnect Closes Exchange as States Warn of Unregulated Sales". Bloomberg. from the original on January 17, 2018. Retrieved January 17, 2018.
  18. ^ Swearingen, Jake (January 17, 2018). "The Rise and Fall of BitConnect, the Sketchiest Crypto Exchange". Select All. New York Magazine. from the original on January 17, 2018. Retrieved January 17, 2018.
  19. ^ "Crypto News Update". NASDAQ.com. January 17, 2018. from the original on January 17, 2018. Retrieved January 18, 2018.
  20. ^ Michaels, Dave (September 1, 2021). "SEC Sues BitConnect and Founder, Alleging Massive Cryptocurrency Scam of World-Wide Investors". Wall Street Journal. ISSN 0099-9660. Retrieved September 2, 2021.
  21. ^ https://www.sec.gov/litigation/complaints/2021/comp-pr2021-172.pdf [bare URL PDF]
  22. ^ "Cryptoexchange founder accused of defrauding investors of $2 billion". www.cbsnews.com. September 2021. Retrieved September 2, 2021.
  23. ^ "Office of Public Affairs | BitConnect Founder Indicted in Global $2.4 Billion Cryptocurrency Scheme | United States Department of Justice". www.justice.gov. February 25, 2022. Retrieved March 12, 2024.
  24. ^ . September 5, 2021. Archived from the original on September 6, 2021. Retrieved September 6, 2021.
  25. ^ "BitConnect Founder Indicted in Global $2.4 Billion Cryptocurrency Scheme". www.justice.gov. February 25, 2022. Retrieved March 6, 2022.
  26. ^ "Crypto Fraud Victims Receive Over $17 Million in Restitution from BitConnect Scheme". www.justice.gov. January 12, 2023. Retrieved May 12, 2023.
  27. ^ Riggins, Alex (January 13, 2023). "San Diego judge orders $17 million restitution payment in BitConnect pyramid scheme". San Diego Union-Tribune. Retrieved May 12, 2023.
  28. ^ Paez, Danny (February 2, 2018). "'Bitconnect Carlos' Meme Is Everything Wrong With Cryptocurrency Hype". Inverse. Retrieved January 16, 2019.
  29. ^ Oliver, John. "Cryptocurrencies". Youtube. Retrieved July 11, 2022.

External links edit

  • Official website ()

bitconnect, also, spelled, bitconnect, kimconnect, stylized, bitconnect, ticker, code, open, source, cryptocurrency, 2016, 2018, that, connected, with, high, yield, investment, program, type, ponzi, scheme, after, platform, administrators, closed, earning, pla. Bitconnect also spelled BitConnect and KimConnect stylized bitconnect ticker code BCC was an open source cryptocurrency in 2016 2018 that was connected with a high yield investment program a type of Ponzi scheme 2 3 4 After the platform administrators closed the earning platform on January 16 2018 and refunded the users investments in BCC following a 92 coin value crash confidence was lost and the value of the coin plummeted to below 1 from a previous high of nearly 525 Bitconnect CoinBitconnect logoDenominationsCodeBCCDevelopmentOriginal author s Satish KumbhaniInitial releaseFebruary 15 2016 1 Development statusDiscontinuedWritten inC C Operating systemWindows OS X Linux Android iOSSource modelOpen sourceLicenseMIT LicenseLedgerTimestamping schemeProof of stake Proof of work hybrid Block reward0 42 every 15 days 10 inflation per yearBlock time60 secondsWebsiteWebsitebitconnect wbr co last archived version 28 November 2018 Contents 1 History 2 Criticism and collapse 3 Legal issues 4 Internet meme 5 See also 6 References 7 External linksHistory editBitconnect was released in 2016 to allow users to lend the value of Bitconnect Coin in return for interest payments The marquee program was the so called lending platform where users traded Bitcoin for Bitconnect Coin and could lock in the instantaneous value of the coin for a set period of time while earning interest calculated daily The interest payouts were determined by a so called trading bot The trading bot was the most controversial piece of the Bitconnect co system citation needed The liquidity of the BCC cryptocurrency funded users ability to exchange their earnings for Bitcoin On November 7 2017 the government of the United Kingdom issued Bitconnect a notice with two months to prove its legitimacy 1 5 On January 3 2018 Texas State Securities Board issued a cease and desist to the company calling it a Ponzi scheme and citing failings in user earnings transparency and misleading statements 1 Texas State Security Board and North Carolina Secretary of State Securities Division warned that Bitconnect was not registered to sell securities in their respective states 1 On January 17 2018 Bitconnect shut down 3 1 and BCC prices crashed by 92 immediately after 6 Bitconnect announced it would refund its loans 7 On January 31 2018 a temporary restraining order froze Bitconnect s assets expiring on February 13 8 However Bitconnect as an entity never actually existed so it is unclear what assets Bitconnect has or ever had An alleged India region leader one level below the founder of Bitconnect Divyesh Darji was arrested in Delhi India on August 18 2018 9 It is suspected that Darji is connected to well known criminal entities involved in laundering so called Black Money after the Indian government s demonetization of the rupee In 2019 Darji was arrested and released on bail in connection with a similar scam called Regal Coin 10 Criticism and collapse editBitconnect was suspected of being a Ponzi scheme 11 because of its multilevel marketing structure and impossibly high payouts 1 daily compounded interest 6 7 12 Bitconnect interest fluctuated greatly with the volatility of Bitcoin which its value was tied to The Bitconnect Coin was among the world s top 20 most successful cryptocurrency tokens 13 until its price collapsed after traders began losing confidence BCC rose from a post ICO price of 0 17 to an all time high of US 463 in December 2017 it declined to US 0 40 as of March 11 2019 Bitconnect released outstanding loans at US 363 62 to the Bitconnect Wallet in the form of BCC However soon after that news the internal exchange price and liquidity collapsed resulting in a nearly complete loss of value 7 14 15 Legal issues editOn January 16 2018 Bitconnect announced it would shut down its cryptocurrency exchange and lending operation after regulators from Texas and North Carolina issued a cease and desist order against it 16 17 18 19 On January 31 2018 a U S District Court Western District of Kentucky granted a temporary restraining order freezing Bitconnect s assets and to disclose cryptocurrency wallet and trading account addresses as well as the identities of anyone to whom Bitconnect has sent digital currencies within the last 90 days citation needed In September 2021 the U S Securities and Exchange Commission sued Bitconnect alongside its founder Indian Satish Kumbhani American Glenn Arcaro who served as Bitconnect s lead national promoter in the United States from August 2017 to January 2018 and Future Money LTD a company Arcaro created to lure into Bitconnect s lending program The SEC alleged that Bitconnect defrauded U S investors a total of 2 4 billion 20 21 22 23 Parallel to SEC civil charges the United States Department of Justice had initiated criminal charges against Arcaro On September 1 2021 Arcaro pleaded guilty of criminal charges pressed by DOJ which includes conspiracy to commit wire fraud and criminal forfeiture 24 The DOJ also indicted Kumbhani on various federal charges in February 2022 including money laundering and fraud 25 On January 12 2023 a federal district court in San Diego ordered that Arcaro pay 17 million in restitution to be distributed to approximately 800 victims 26 He also agreed to forfeit more than 24 million which could also be used in the future to repay victims 27 Internet meme editOn October 28 2017 Bitconnect held its first and only annual ceremony in Pattaya Thailand During the event an investor named Carlos Matos from New York City gave an exuberant presentation and testimonial about the website which included him intensely screaming Bitconnect several times in a variety of registers 28 this quickly became an Internet meme Both the internet meme and the questionable practices of Bitconnect were profiled by John Oliver and Keegan Michael Key on the program Last Week Tonight 29 See also editList of cryptocurrencies OneCoin PlusToken USI TechReferences edit a b c d e What is BitConnect BCC and how does it work Finder com January 2 2018 Archived from the original on January 25 2018 Retrieved January 30 2018 Mix January 17 2018 How BitConnect pulled the biggest exit scheme in cryptocurrency The Next Web Archived from the original on January 31 2018 Retrieved January 30 2018 a b Wieczner Jen January 17 2018 Bitcoin Crashes to Below 10 000 as Cryptocurrency Scams Scare Investors Fortune Archived from the original on January 27 2018 Retrieved February 10 2018 Seeking Victims in Bitconnect Investigation Federal Bureau of Investigation Retrieved January 4 2021 BITCONNECT LTD Filing history free information from Companies House beta companieshouse gov uk a b Williams Sean BitConnect Alleged Crypto Ponzi Scheme Shutters Its Lending and Exchange Services and Plunges 92 The Motley Fool Archived from the original on January 18 2018 Retrieved January 18 2018 a b c Tepper Fitz Bitconnect which has been accused of running a Ponzi scheme shuts down TechCrunch Archived from the original on January 18 2018 Retrieved January 18 2018 SEC gov BitConnect et al www sec gov Retrieved December 23 2023 Osborne Charlie Alleged head of BitConnect cryptocurrency scam arrested in Dubai ZDNet ZDNet Retrieved October 27 2018 Bitcoin millionaire on the run after second cryptocurrency scam Independent co uk June 5 2019 Popper Nathaniel Bowles Nellie 2018 Bitcoin Falls Below 10 000 as Virtual Currency Bubble Deflates The New York Times ISSN 0362 4331 Archived from the original on January 18 2018 Retrieved January 18 2018 Cheng Evelyn January 17 2018 Digital currency plunge may be healthy for cryptocurrency market CNBC Archived from the original on January 18 2018 Retrieved January 18 2018 Williams Sean July 20 2017 The 20 Largest Cryptocurrencies by Market Cap The Motley Fool Retrieved June 22 2018 Changes coming for the Bitconnect system Halt of lending and exchange platform BitConnect January 16 2018 Archived from the original on January 18 2018 Bhargav Sushant January 16 2018 Bitconnect Shut Down it s Lending Platform Officially for Good TechScoop in Archived from the original on January 18 2018 Retrieved January 18 2018 McKay Tom January 17 2018 BitConnect Anonymously Run Crypto Exchange Crashes After States Issue Cease and Desists Gizmodo Archived from the original on January 17 2018 Retrieved January 17 2018 Kharif Olga January 16 2018 BitConnect Closes Exchange as States Warn of Unregulated Sales Bloomberg Archived from the original on January 17 2018 Retrieved January 17 2018 Swearingen Jake January 17 2018 The Rise and Fall of BitConnect the Sketchiest Crypto Exchange Select All New York Magazine Archived from the original on January 17 2018 Retrieved January 17 2018 Crypto News Update NASDAQ com January 17 2018 Archived from the original on January 17 2018 Retrieved January 18 2018 Michaels Dave September 1 2021 SEC Sues BitConnect and Founder Alleging Massive Cryptocurrency Scam of World Wide Investors Wall Street Journal ISSN 0099 9660 Retrieved September 2 2021 https www sec gov litigation complaints 2021 comp pr2021 172 pdf bare URL PDF Cryptoexchange founder accused of defrauding investors of 2 billion www cbsnews com September 2021 Retrieved September 2 2021 Office of Public Affairs BitConnect Founder Indicted in Global 2 4 Billion Cryptocurrency Scheme United States Department of Justice www justice gov February 25 2022 Retrieved March 12 2024 US SEC charges Indian citizen for bitcoin scam September 5 2021 Archived from the original on September 6 2021 Retrieved September 6 2021 BitConnect Founder Indicted in Global 2 4 Billion Cryptocurrency Scheme www justice gov February 25 2022 Retrieved March 6 2022 Crypto Fraud Victims Receive Over 17 Million in Restitution from BitConnect Scheme www justice gov January 12 2023 Retrieved May 12 2023 Riggins Alex January 13 2023 San Diego judge orders 17 million restitution payment in BitConnect pyramid scheme San Diego Union Tribune Retrieved May 12 2023 Paez Danny February 2 2018 Bitconnect Carlos Meme Is Everything Wrong With Cryptocurrency Hype Inverse Retrieved January 16 2019 Oliver John Cryptocurrencies Youtube Retrieved July 11 2022 External links editOfficial website last archived version 28 November 2018 Portals nbsp Internet nbsp Economics nbsp Free and open source software Retrieved from https en wikipedia org w index php title Bitconnect amp oldid 1218158273, wikipedia, wiki, book, books, library,

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