For naive investors who invested in BitConnect (BCC), today featured an exponentially bigger loss than the general cryptocurrency downtrend. After discontinuing its “lending” program, BCC instantly plummeted over 90% from the day’s high, dropping from over US$330 to a low of just under US$20.
While most of the community had warned about the blatant scam represented by BitConnect’s lending program, the Ponzi still rose to a market cap of almost US$3 billion. With the lending program, individuals could deposit USD or Bitcoin onto their BitConnect accounts, where they would then stake their holdings for daily interest for a predetermined period of time. The more money the user locked up in the loan, the higher the daily returns and the shorter period in which their money was frozen for.
Just hours ago, BitConnect announced that it would be closing all loans and discontinuing its lending program, effective immediately. Users with existing loans would have BCC credited to their accounts equal to the loan value, using a set value of US$363.62 per BCC in reimbursement. The BitConnect coins, now essentially worthless, were immediately transferred to other exchanges and dumped immediately by the duped investors.
While investors technically did not lose their funds, the exchange of their Bitcoin and dollars for the now useless BCC represents an essentially equal fate. While the coin has recovered from the initial low of under US$20 to a current price of just under US$40, investors and lenders have still witnessed the vast majority of their investments vanish in an instant. According to the BitConnect company, it chose to close the lending platform after massive bad press, along with the cease and desist notices it had received from the states of Texas and North Carolina.
Due to the nature of crypto, it is highly unlikely that duped investors will receive any sort of compensation. Since the announcement, BitConnect has dropped from its position in the top 30 on CoinMarketCap to well below the top 100. This is an unfortunate event for the overarching crypto community as well, as these new investors will likely not return to the cryptocurrency scene after seeing most of their investments stolen.