Bitconnect, a cryptocurrency exchange platform and a cryptocurrency, that is suspected of a Ponzi scheme from the cryptocurrency community, has announced on Tuesday that it will be shutting down its lending platform.
Bitconnect coins or BCC crashed over 95 percent in a 24 hour period. Prices began crashing already on January 7, when it hit a high of $431, before plummeting down to Wednesday’s prices of nearly $8.
Bitconnect said on a statement that it is shutting down the platform due to “bad press” which has made its community uneasy, receiving cease and desist letters from two different states, and continuous DDos attacks or disruption of its server.
Bitconnect says it is closing its lending operation effective immediately with the release of all outstanding loans. Bitconnect then goes on to say that with the release of users active loans in the lending wallet “we are transferring all your lending wallet balance to your BitConnect wallet balance at 363.62 USD.”
But BCC prices plummeted down to $8, meaning majority of investors will result in a net loss, assuming most investors entered in a later price point.
Bitconnect’s platform was a site where users could loan their cryptocurrencies to the exchange for returns depending on the time frame of the loan and amount given. For example, a $10,000 loan for 180 days would return back approximately 40 percent each month, with a .20 percent daily bonus, according to TechCrunch.
Bitconnect also had a multi-level referral code, which made users post all over social media with their code trying to get their peers to join in, contributing to the potential scheme.
In order to join the loan program, users would need to have BCC , which ended up leading to the spike in prices. With no other uses for the coin now that the platform is closed, prices began to crash.
Cryptocurrency traders have all flocked to social media sites calling Bitconnect a fraud and running a Ponzi scheme, including Ethereum founder, Vitalik Buterin.
On social media sites, such as Reddit, users posted images and posts regarding Bitconnect calling it a scam. Others who held BCC were not able to exit their positions, as in sell BCC and convert back to Bitcoins.
According to Coindesk, BitConnect has not responded to comments regarding the matter.