With all the news of ICOs and new cryptocurrencies out there it’s easy to get swept up in the phenomenon. Unfortunately many people did just that and ignored the warning signs of the part Ponzi scheme, part pyramid scheme that is Bitconnect. Some people lost everything, and markets are still currently frozen. What went wrong with Bitconnect?
Bitconnect started off like any other ICO, with its value steadily rising. Then people started to make serious money, on paper anyway. There were bonuses for bringing in new members, an obvious sign of a pyramid scheme. Older investors were cashing out with the money of newer investors, a clear sign of a Ponzi scheme. So why did people ignore these clear warning signs?
With the frenzy around cryptocurrency, we’re hearing terms like “Bitcoin Millionaire” multiple times a day. It can be easy to ignore warning signs of a scam when you are seeing so many people getting rich quick this way.
It wasn’t until governments and media started asking questions that people became suspicious. The state governments in Texas and North Carolina issued “cease and desist” letters to the operators of Bitconnect, while many media outlets began questioning its legitimacy.
As people tried to pull their money out of Bitconnect it collapsed, and eventually accounts were frozen. It’s worth noting that Bitconnect’s sister ICO, Bitconnect X, is still raising funds despite the indefinite freeze on Bitconnect perpetrated by the government. Will Bitconnect be back? Learn more about the collapse of Bitconnect from this infographic.
Bitconnect started off like any other ICO, with its value steadily rising. Then people started to make serious money, on paper anyway. There were bonuses for bringing in new members, an obvious sign of a pyramid scheme. Older investors were cashing out with the money of newer investors, a clear sign of a Ponzi scheme. So why did people ignore these clear warning signs?
With the frenzy around cryptocurrency, we’re hearing terms like “Bitcoin Millionaire” multiple times a day. It can be easy to ignore warning signs of a scam when you are seeing so many people getting rich quick this way.
It wasn’t until governments and media started asking questions that people became suspicious. The state governments in Texas and North Carolina issued “cease and desist” letters to the operators of Bitconnect, while many media outlets began questioning its legitimacy.
As people tried to pull their money out of Bitconnect it collapsed, and eventually accounts were frozen. It’s worth noting that Bitconnect’s sister ICO, Bitconnect X, is still raising funds despite the indefinite freeze on Bitconnect perpetrated by the government. Will Bitconnect be back? Learn more about the collapse of Bitconnect from this infographic.