‘I’ve lost everything’. The crash left people penniless (Illustration: Getty images)
Cryptocurrency investors are claiming to have lost their life savings in a devastating crash which saw a £200 virtual coin become almost worthless overnight.
On Tuesday this week, the British firm behind a cryptocurrency called Bitconnect (BCC) announced that it was closing down its lending and exchange platform.
Despite promises to list BCC on other exchanges so trading could continue, the news sent the market into freefall.
The coin launched at the beginning of last year and went from being worth less than a cent to being valued at more than $400 (£287), with the total BCC market worth about $2.7 billion (£1.9 billion).
It was promoted by a bizarre and hilarious video showing a bald man called Carlos excitedly ranting about how much money he’s made.
The film features clapping and whooping but does not contain shots of an actual audience.
Bitconnect has been dogged by claims that it’s a Ponzi Scheme – the name for a type of
scam practised by Bernie Madoff
in which con artists pays old investors a return generated by cash pledged by new investors.
Both Ethereum founder Vitalik Buterin and Litecoin founder Charlie Lee slammed the cryptocurrency form in reply to a tweet by an ex-hedge fund manager called Michael Novagratz, which you can read below.
Bitconnect said this criticism ‘made community members uneasy and created a lack of confidence in the platform’ in a statement announcing the closure of its lending and exchange platform, which allowed people to borrow and trade BCC.
The firm has also received cease and desist letters from the Texas State Securities Board and the North Carolina Secretary of State Securities Division.
In a statement, the firm vowed to make sure investors got their cash.
‘We are closing the lending operation immediately with the release of all outstanding loans,’ it wrote.
‘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.
‘This rate has been calculated based on last 15 days averages of the closing price registered on coinmarketcap.com.’
But this promise was not enough to stop investors losing faith in Bitconnect altogether.
Its price has been on the slide for months, but on Tuesday it plunged from a high of about $330 (£237) to just over $20, before slumping to a dismal low of $5 the next day.
This graph shows the dramatic plunge in the price of Bitconnect (Chart: CoinMarketCap)
There have been three companies called Bitconnect set up in the UK.
It is not known if there are any links between these companies and the names of each firm’s directors are totally different. We have decided not to publish any of the directors’ names.
In November 2017, Companies House launched the first stage of a process to strike off a firm called Bitconnect Ltd. from Britain’s Registrar of Companies.
Another is called Bitconnect Trading and is run by a man who also operates a Bitcoin mining business.
A total of 14 directors are named in a Companies House filing about a third firm called Bitconnect International Plc.
The BCC crash hit ordinary people as well as investors (Photo: Getty Images)
One of the directors is a ‘life success consultant’ on a mission to help people ‘rely on and believe in your unlimited potential and power’. When we phoned the number on this man’s website, he did not answer.
The other directors are mostly based in London, although they appear to hail from a number of countries from around the world including India and Vietnam.
On Reddit, a man with the name Litecoin whose posting history indicated he is a serious cryptocurrency trader, claimed to have lost his life savings in the crash.
The unfortunate investor said he took out a business loan of $500,000 and has now lost it all.
He wrote: ‘I planned to withdraw within a month or two. Now I cant access the funds to sell and the market crashed, I cannot pay for the business, my family needs the funds, I need help.
‘This is the worst day.’
This is a ‘copy pasta’ – the name for a piece of text which is repeatedly replicated like a meme – posted in response to the crash (Picture: Reddit)
Another person raged: ‘This is all a bad joke right?
‘I’m ruined. Like really fucking ruined. I have nothing left. I put everything I had into this because I trusted them.
‘Literally all of my family’s savings are in Bitconnect, because a friend told me the risk was worth it.
‘Are you telling me I lost everything? $80,000 gone like nothing?’
On a Reddit forum dedicated to the discussion of Bitconnect, one person published the number of a suicide charity whilst others made the astonishing (and probably untrue) claim that crime syndicates were now looking to exact revenge on the people who launched the cryptocurrency.
Remarkably, the price of Bitconnect has started to buoy up after its Twitter account promised that the currency would regain its value.
As well as a cryptocurrency, Bitconnect runs a website which publishes cryptocurrency news. This has been updated since the crash, suggesting the company is planning to continue operations.
The crypto-firm said it was only closing the lending platform and its exchange is still working so people can trade their coins.
This apparently positive development tripled the price Bitconnect to roughly $33.
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