3 Lessons From Bitconnect Fraud Cases
Although the crypto market continues to grow and attract more and more interested, various cases of fraud often occur in the world of crypto. One example comes from BitConnect which was originally a Bitcoin exchange, but then provided a crypto investment platform and held ICO to promote its own homemade coin. Bitconnect (formerly) known as one of the leading exchanges was easily won the trust of its clients. But it turns out, this is just the beginning of Bitcoinnect fraud case that berbuntut long.
What happened? Investigate a calibaration, crypto investment program provided Bitconnect was no more than just Ponzi scheme, and the token that was released was suspected abal-abal or much manipulated. In the end, Bitcoinnect was forced to announce the closing of its investment services and trading platform.
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To raise awareness of similar types of crypto money scams, there are three things that can be learned from Bitconnect fraud cases. What are they?
- Do not be easily tempted by the offer of the grass
The Bitconnect fraud case begins with a guarantee that investors are able to earn up to 40 percent profit per month through the investment program they offer. BitConnect follows a four-level investment system based on the initial deposit amount, so that the more money clients get, the bigger and faster the profits are.
Not only that, investors are promised a one percent return on investment (ROI) every day. To this end, the company has developed its own trading bot and volatility software promised to bring wealth to investors.
So if you invest 1,000 USD into your Bitconnect account, you can generate more than 50 million USD within three years, assuming the scheme does fulfill its promise of one percent interest given every day. Undoubtedly, many consider this program to be unsustainable.
"If (one percent per day) is what they offer, then it is the Ponzi Scheme," said Vitalik Buterin, founder of Ethereum who expressed his concern with Bitconnect's investment scheme.
Although this warning is already known to many people, Bitconnect continues to invest in relying on aggressive marketing strategies on all fronts. The way they work is by recruiting marketers who are able to get new investors through affiliate programs. This new investor will invite acquaintances to invest, and so on and so forth. In the real world, we call it a pyramid scheme, or MLM (Multi Level Marketing).
With the aim of hooking up potential Bitconnect investors, very many marketers are involved and they use a very clever way to cheat. The tactics used by promoters on these channels and social media platforms is to showcase a "profit" screenshot of Bitconnect's lucrative investment program. In fact, most of their profits come from affiliates and not the investment itself.
Bitconnect is indeed able to develop with a deceptive promotional style, proven that many investors are trapped and handed over their money. However, the depravity of this method began to unravel when the platform experienced their first legal problem.
2 Do not Underestimate Crypto Company Closing News
During its heyday, Bitconnect was able to reach more than 2.6 billion USD in terms of market capitalization. The value of the coin (BCC or Bitconnect Coin) can even exceed 400 USD. As one of the top 20 cryptoes, BCC token from BitConnect has finally attracted the attention of the authorities. Following an investigation in November, the British Registrar of Companies instructed Bitconnect with notice of forced termination.
Within a week, Bitconnect's forced cessation was in the spotlight. Many media reported on the Bitcoinnect fraud case, so thousands of fearful investors began to speculate about the security of their funds. One of Bitconnect's most famous promoters is TNW, or better known as Ryan Hildreth. Following the closing scandal of Bitcoinnet, he immediately removed the promotional video from his own YouTube channel, for fear of being considered one of the cheats.
Nevertheless, there are still many promoters who continue to promote Bitconnect regardless of legal threats. Instead, they state that the forced closure notice affects only certain corporate divisions (Bitconnect Ltd.), so it will not affect its principal company (Bitconnect International PLC).
At that time, most investors still believe the reasons given by Bitconnect promoter. None of the warning signals are able to instill a sense of doubt in their minds. Bitconnect is tirelessly working to increase its reputation worldwide to distract the public from the real problem. Not only that, Bitconnect also signed a partnership with the Blockchain Expo in California. The company even attended the ICO EVENT in Amsterdam as a sponsor, also held a quite luxurious promotional party in Thailand.
The imagery did not last long. In January 2018, Bitconnect was 'slapped' with a forced abortive letter from the Texas Securities Board, which ordered the company to shut down its operations and stop the distribution of BCC. The agency makes a requirement for Bitcoinnect to enter into an agreement with the Securities Commissioner.
A week after the arrival of a letter from the Texas Securities council, another dismissal letter came from the North Carolina Securities Division. The letter confirms that Bitconnect carries out a potentially fraudulent operation, which involves the company in a series of violations. Interestingly, a notice from North Carolina also states that Bitconnect promoters who have amassed thousands of Dollars profits also violate the law.
Shortly after this news spread, the loyal promoters began to distance themselves from Bitconnect. They claim to have never participated from the beginning. Some of them choose to clear their entire YouTube channel, while others just move to other crypto currency promotions.
3 Featured Content is Not a Security Guarantee
Allegedly as a strategy to improve the performance of its site, Bitconnect also launched its own news segment. The content output is considered stable enough and qualified for Google to make it a "legitimate" news source. Bitcoinnect content was successfully featured on Google News Channel and other credible media. Back then, Bitconnect had a regular stream of content. Anyone who searches for the word "bit" in Google will surely meet the news generated by Bitconnect.
In fact, Google is just a 'machine' that selects news content and articles based on certain algorithms. So the suspicion of Bitconnect certainly not be a consideration of Google in choosing excellent content. As long as the Bitconnect page is still heavily visited and promoted aggressively, it will get a major spot in the search results.
Therefore, you need to be more careful in searching for news sources and articles on the internet. Do not be easy to believe with crypto content that is favored by Google, because a stock like Bitconnect can still get a good place in the search results.
Be Careful, Bitconnect Not Fully Closed
Despite repeated warning and forced closure by authorities, Bitconnect has not fully stopped operating; either because he has many subsidiaries or is so skillfully disguised as fraudulent activity. Even until this article is written, Bitconnect sites can still be opened, as well as with the BCC promotions they offer.
They reasoned that the closure of offices in some countries not because of caught cheating practices, but rather caused by technical factors such as server downtime and DDoS attacks.
Here is an official announcement from Bitconnect:
"We will immediately stop the activity in the lending program (investment) and free up all the loans (investors) With the release of all your loans we transfer all the balance in the loan Wallet to your BitConnect wallet balance.In short, we close the loan and exchange service. BitConnect.co will still operate as a provider of wallet, news, and crypto education services. "
As soon as the unpleasant announcement began to spread on the internet, panicked investors flocked to comments to the Bitconnect sub-reddit (which has since been locked). BCC coins, collapsed almost instantly down 30 USD, or declined by 96 percent.
Bitconnect sites that are still active indicate if the company can offer its services to visitors who open the page. Given Bitconnect's rich history history, it's a good idea to stay away from advertising and product offerings from this exchange. If you are looking for Wallet or need to make transactions, there are many more Bitcoin Wallets and other credible stock exchange that are more credible and reliable.
https://www.seputarforex.com/artikel/3-pelajaran-dari-kasus-penipuan-bitconnect-284612-38