The inevitable happened -- Bitconnect closes lending platform, exchange

Blaming website problems and pending legal action by two American states, Bitconnect has thrown in the towel and closed its lending program and exchange platform.

Yesterday evening China time, Bitconnect halted logins and later posted a public announcement about changes in the project.

This is to inform all community members that we are closing the Bitconnect lending and exchange platform. We are closing the lending operation immediately with the release of all outstanding loans. With release of your entire active loan in the lending wallet we are transferring all your lending wallet balance to your BitConnect wallet balance at 363.62 USD. This rate has been calculated based on last 15 days averages of the closing price registered on coinmarketcap.com. You are free to withdraw your BitConnect coin currently in QT wallets that was used for staking as well. We are also closing BCC exchange platform in 5 days. In short, we are closing lending service and exchange service while BitConnect.co website will operate for wallet service, news and educational purposes.

At the time of this writing, the Bitconnect Coin (BCC) was trading around $40 on external exchanges, meaning everyone holding BCC have lost all but a fraction of their investments.

The announcement goes on to blame "bad press," two pending cease and desist orders by Texas and North Carolina, and alleged dedicated denial of service (DDOS) as reasons for the closures.

Huge if true.

The announcement also insists the Bitconnect website will be redesigned as a news and education site, the BCC token will continue to be traded on other exchanges, and the new BitconnectX ICO sale will continue as planned. Sales today, however, were much slower than previous days, when the daily allotment of BCCX was sold out within minutes.

BitconnectX sales are slow today (screencap taken at 1:48 UTC)

Sales of the BCCX token were suspended yesterday, purportedly to allow the team to make improvements to the website's security. Sales resumed today at 00:00 UTC with double the daily allotment of 261,333 tokens available. At press time (1:50 UTC), only 21,022 had been sold.

While Bitconnect operators offer three main reasons to close their lucrative lending and exchange programs, there is some doubt those are the actual reasons.

• There has always been bad press about Bitconnect, as several notable personalities in the cryptocurrency world condemned it as a ponzi scheme. The latest news has been no different.
• The two cease and desist orders (CDOs) allowed Bitconnect to respond within 30 days -- the end of January. Each order is valid only within the states issuing them, and Bitconnect has worldwide reach. Not mentioned in the farewell letter was another legal problem: business regulators in the UK were threatening to remove Bitconnect's UK business license pending submission of required financial information.
• The DDOS began over the weekend, and ended yesterday, presumably because Bitconnect and Cloudflare had coped with the problem. But the site has had similar login problems since the DDOS problem was solved. (See Error 404 image at the beginning of this article.)
• Beginning last week, several of the biggest Bitconnect promoters were pulling or sharply curtailing their Bitconnect boosterism on YouTube. Did they have advance notice of the platform's closure? The timing seems more than coincidental.

In short, it smells like an exit scam by a shady outfit, which needed some convenient excuses to close up shop and make off with millions of users' Bitcoin.

Here is the announcement message posted this morning.

[DISCLOSURE: Last May I invested $120 in Bitconnect as a test. I had no referral income, as I did not actively promote Bitconnect. I got my original investment back, plus some, and as of yesterday, still had $340 in my lending wallet. According to the terms of the closure, I am due 0.935 BCC, now worth about $37 -- 11% yesterday's value. If I could actually log in, I might be able to withdraw those BCC tokens, but I'm assuming that money is gone forever. Thousands upon thousands of people lost substantially more funds than I did, and I feel bad for them.]

[This post also appears at my blog.]