BitConnect, a cryptocurrency exchange with a dubious reputation, announced on Tuesday that it was closing down its lending and trading platform.
Citing bad press, two cease-and-desist letters from the Texas and North Carolina securities authorities on the basis that it lacks the proper registration, and perpetual DDoS (distributed denial-of-service) attacks, the anonymous managers of the exchange wrote on their website, “We are closing some of the services on the website platform and we will continue offering other cryptocurrency services in the future.”
BitConnect has long faced allegations that it was, essentially, a Ponzi scheme. While Bitcoin and other cryptocurrencies have faced similar accusations, BitConnect was particularly notorious for its multilevel-marketing structure. New users received a loan from BitConnect in the form of BCC, a cryptocurrency that the exchange issued, and could net a commission of more BCC if they were able to convince other people to also get a loan from the service.
Even with these shaky foundations, BitConnect had been running somewhat smoothly up until the recent downturn in cryptocurrencies, with many dropping 30 to 40 percent in value over the past week. BCC, which was once one of the 20 most successful cryptocurrencies in 2017, according to Bloomberg, has been hit particularly hard, plummeting by 65 percent in price since Jan. 3 in response to the crackdown from state securities authorities. Although BCC is worth well under $30, down from $425 a little over a week ago, it still has a market cap of close to $1 billion.
Those who bought into BCC will have a few options after the BitConnect exchange shuts down. The platform announced that it will be transferring users’ lending wallet balances to their BitConnect wallet balances at a rate of $363.62 per token, based on the price average of the past 15 days. BitConnect also notes that it is working to make BCC trading available on other exchanges, and to build another platform that can host the cryptocurrency.
One more thing
You depend on Slate for sharp, distinctive coverage of the latest developments in politics and culture. Now we need to ask for your support.
Our work is more urgent than ever and is reaching more readers—but online advertising revenues don’t fully cover our costs, and we don’t have print subscribers to help keep us afloat. So we need your help. If you think Slate’s work matters, become a Slate Plus member. You’ll get exclusive members-only content and a suite of great benefits—and you’ll help secure Slate’s future.Join Slate Plus