BitConnect Shutters Crypto Exchange Site After Regulator Warnings

[No great surprise here – most people in the crypto community know BitConnect as a Ponzi scheme]

The company behind the controversial cryptocurrency BitConnect has announced that it will close down its lending and exchange platform.

BitConnect Home Page (Image: BIUK)
BitConnect Home Page (Image: BIUK)

BitConnect’s lending service will be shuttered, effectively immediately, while its exchange platform will close in 5 days, according to a post on its website published Tuesday.

“In short, we are closing lending service and exchange service while BitConnect.co website will operate for wallet service, news and educational purposes,”

the post explained.

The announcement blames a myriad of factors, perhaps most notably the cease-and-desist letters issued in recent days from regulators in Texas and North Carolina.

Both letters stated that BitConnect was engaging in the sale of unregistered securities tied to a token sale.

“We have received two Cease and Desist letters, one from the Texas State Securities Board, and one from the North Carolina Secretary of State Securities Division,”

the BitConnect team wrote.

“These actions have become a hindrance for the legal continuation of the platform.”

The post also blamed “bad press” that has “made community members uneasy and created a lack of confidence in the platform.”

BitConnect has been accused of constituting a Ponzi scheme, and several figures in the space, including the founder of ethereum, Vitalik Buterin, have levied criticisms against it in recent months.

Read more: CoinDesk

As bitcoin’s price plunges, skeptics say the cryptocurrency has no value – but they’re wrong

Bitcoin’s price has been on a wild ride since its inception.

2017 alone saw massive gains, starting the year at under $1,000 and, at its peak, breaking $19,000, according to industry site CoinDesk.

On Tuesday, it was trading at $11,943, a decline of 12 percent, according to CoinDesk.

As bitcoin’s popularity surges and its price rises and falls, more and more people are asking the same question: How does bitcoin, something that’s essentially invisible and intangible, have value?

Bitcoin Cryptocurrency (Image: MaxPixel)
Bitcoin Cryptocurrency (Image: MaxPixel)

Scarcity and utility

In economics, something has value if it checks the following two boxes: scarcity and utility. Scarcity just means that something has a finite supply. In the case of bitcoin, the cryptocurrency has a set cap of 21 million bitcoins.

Many analysts note that this set cap makes bitcoin more desirable than other assets, even gold. That’s because unlike with gold, there’s no need to worry about a digital Gold Rush. A treasure trove of bitcoin won’t ever be “discovered,” causing the crypto’s price to crash with an influx in supply.

“There are potentially millions of times more gold underground than actually has been extracted,”

said Tom Lee, head of research at Fundstrat Global Advisors. Lee was chief equity strategist at J.P. Morgan before co-founding Fundstrat in 2014.

Read more: CNBC