If closing the entire platform wasn’t bad enough, BitConnect has now been hit with a lawsuit by a group of investors alleging that the BitConnect “crypto wonderland” was, in fact, a “wide-reaching Ponzi scheme.”
BitConnect officially shuts down>>
The legal complaint was filed in Florida by six individuals on their own behalf, as well as on that of all the others who lost their money by investing in BitConnect. The six plaintiffs stated that their personal losses amounted to $771,000.
Launched in 2016, BitConnect allegedly promised investors a 40% monthly return by trading the invested funds on the cryptocurrency market. However, some people, including the plaintiffs, suspected that the platform was using funds from new investors to meet the expectations of existing ones — A.K.A a Ponzi scheme.
This is certainly not the first time BitConnect’s business activities have been publicly questioned. Earlier this year, the company had been hit with cease-and-desist orders from the states of Texas and North Carolina for selling unregistered securities.
Though the recent shutdown speaks volumes about the state of its business and even the veracity of the plaintiffs’ claims, the company still hasn’t made any statements regarding the allegations and blamed the “continuous bad press” for its decision to close the BitConect platform.
Over the past two weeks, BitConnect’s market cap has been on a downward spiral, now standing at $102 million (it was $2.7 billion in early January).
What’s more dubious about BitConnect is that the U.K-based firm has never disclosed any information on its backers or management team, nor has it issued a white paper describing the business. It also gave no mention of how to contact or locate the company.
But despite all its troubles, BitConnect is still in business. Its offshoot BitConnectX is still planning to hold an ICO for buyers outside the U.S.
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