BitConnect's lending and mining Ponzi scheme is one of the most representative major scams in the cryptocurrency world, with the amount involved reaching $2.4 billion, described by the U.S. Department of Justice as a 'textbook' Ponzi scheme.
The platform was launched in February 2016, founded by Indian citizen Satish Kumbhani, and its core scam was the 'lending and mining' project. The platform falsely claimed to have exclusive trading bots and volatility software that could generate high profits from trading in the cryptocurrency market, promising investors that lending virtual currency would yield daily 1% and nearly 40% monthly compound returns. Additionally, it expanded through a multi-level referral reward system and engaged several KOLs for intensive promotion on platforms like YouTube, with some promoters earning over $2.6 million from referral commissions; some even claimed at promotional events that the token price would rise to $1,000.
In reality, the platform had no profitable trading business; the so-called returns were entirely dependent on funds from new investors being paid to old investors. Investors needed to first exchange Bitcoin for the platform's issued BCC tokens before lending, and the platform also artificially manipulated BCC prices to create hype. In December 2017, the price of BCC soared to $463, reaching a historical high, and its market cap even entered the top 20 in the cryptocurrency space, attracting a large number of global investors.
Ethereum's founder publicly pointed out long ago that it was a Ponzi scheme. In January 2018, regulators in Texas and North Carolina issued shutdown orders, and the platform promptly announced the closure of its exchange and the suspension of lending operations. The price of BCC instantly collapsed, falling to $5.92 by the end of the month, and the platform's so-called plan to repay loans using tokens at an exchange rate of $363.62 became meaningless as the token's market value dropped below $10.
U.S. courts froze the platform's assets and launched an investigation; core promoter Glenn Arcaro was sentenced to 38 months in prison after pleading guilty and was ordered to pay over $17.64 million in restitution to victims; five core promoters were sued by the U.S. SEC for illegally selling unregistered digital asset securities. An Australian promoter was convicted for providing unlicensed financial advice, and founder Kumbhani has been on the run since being indicted, with judicial authorities in multiple countries still pursuing relevant parties.
The platform was launched in February 2016, founded by Indian citizen Satish Kumbhani, and its core scam was the 'lending and mining' project. The platform falsely claimed to have exclusive trading bots and volatility software that could generate high profits from trading in the cryptocurrency market, promising investors that lending virtual currency would yield daily 1% and nearly 40% monthly compound returns. Additionally, it expanded through a multi-level referral reward system and engaged several KOLs for intensive promotion on platforms like YouTube, with some promoters earning over $2.6 million from referral commissions; some even claimed at promotional events that the token price would rise to $1,000.
In reality, the platform had no profitable trading business; the so-called returns were entirely dependent on funds from new investors being paid to old investors. Investors needed to first exchange Bitcoin for the platform's issued BCC tokens before lending, and the platform also artificially manipulated BCC prices to create hype. In December 2017, the price of BCC soared to $463, reaching a historical high, and its market cap even entered the top 20 in the cryptocurrency space, attracting a large number of global investors.
Ethereum's founder publicly pointed out long ago that it was a Ponzi scheme. In January 2018, regulators in Texas and North Carolina issued shutdown orders, and the platform promptly announced the closure of its exchange and the suspension of lending operations. The price of BCC instantly collapsed, falling to $5.92 by the end of the month, and the platform's so-called plan to repay loans using tokens at an exchange rate of $363.62 became meaningless as the token's market value dropped below $10.
U.S. courts froze the platform's assets and launched an investigation; core promoter Glenn Arcaro was sentenced to 38 months in prison after pleading guilty and was ordered to pay over $17.64 million in restitution to victims; five core promoters were sued by the U.S. SEC for illegally selling unregistered digital asset securities. An Australian promoter was convicted for providing unlicensed financial advice, and founder Kumbhani has been on the run since being indicted, with judicial authorities in multiple countries still pursuing relevant parties.
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