Ajay Kumar at 18:37, 25 September 2023

2023-09-25T18:37:58Z

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{{short description|2016–2018 fraudulent cryptocurrency}}
{{Use mdy dates|date=October 2021}}
{{Infobox cryptocurrency
| currency_name = Bitconnect Coin
| image_1 = BitConnect.svg
| image_width_1 = 150px
| image_2 =
| image_title_1 = Bitconnect logo
| symbol =
| code = BCC
| ticker_symbol = BCC
| coin_definition =
| white_paper =
| implementations =
| initial_release_version =
| initial_release_date = February 15, 2016<ref name="finder">{{Cite web |url=https://www.finder.com/uk/bitconnect |title=What is BitConnect (BCC) and how does it work? |date=January 2, 2018 |publisher=Finder.com |archive-url=https://web.archive.org/web/20180125020326/https://www.finder.com/uk/bitconnect |archive-date=January 25, 2018 |url-status=live |access-date=January 30, 2018}}</ref>
| code_repository =
| status = Discontinued
| latest_release_version =
| latest_release_date =
| forked_from =
| programming_languages = [[C++]] C#
| operating_system = [[Microsoft Windows|Windows]], [[OS X]], [[Linux]], [[Android (operating system)|Android]], [[iOS]]
| author = Satish Kumbhani
| developer =
| source_model = [[Open source model|Open source]]
| license = [[MIT License]]
| ledger_genesis =
| hash_function =
| issuance =
| timestamping = [[Proof of stake]]
| block_time = 60 seconds
| block_reward = 0.42% every 15 days; 10% inflation per year
| circulating_supply =
| total_supply = 28,000,000
| exchange_rate =
| market_cap =
| website = {{URL|https://bitconnect.co/}} ([https://web.archive.org/web/20181128120223/http://bitconnect.co/ last archived version, 28 November 2018])
}}

'''Bitconnect''' (also spelled '''BitConnect''' and '''KimConnect'''; stylized '''''bitconnect''''', [[Ticker symbol|ticker code]] '''BCC''') was an [[Open-source model|open-source]] [[cryptocurrency]] in 2016–2018 that was connected with a [[high-yield investment program]], a type of [[Ponzi scheme]].<ref name="NW">{{Cite news|url=https://thenextweb.com/hardfork/2018/01/17/bitconnect-bitcoin-scam-cryptocurrency/|title=How BitConnect pulled the biggest exit scheme in cryptocurrency|last=Mix|date=January 17, 2018|work=The Next Web|access-date=January 30, 2018|language=en-US|url-status=live|archive-url=https://web.archive.org/web/20180131080920/https://thenextweb.com/hardfork/2018/01/17/bitconnect-bitcoin-scam-cryptocurrency/|archive-date=January 31, 2018}}</ref><ref name="Wieczner">{{cite news|last1=Wieczner|first1=Jen|title=Bitcoin Crashes to Below $10,000 as Cryptocurrency Scams Scare Investors|url=http://fortune.com/2018/01/17/bitcoin-bitconnect-price-scam/|access-date=February 10, 2018|publisher=Fortune|date=January 17, 2018|url-status=live|archive-url=https://web.archive.org/web/20180127005114/http://fortune.com/2018/01/17/bitcoin-bitconnect-price-scam/|archive-date=January 27, 2018}}</ref><ref>{{Cite web|title=Seeking Victims in Bitconnect Investigation|url=https://www.fbi.gov/resources/victim-services/seeking-victim-information/seeking-victims-in-bitconnect-investigation|access-date=January 4, 2021|website=Federal Bureau of Investigation|language=en-us}}</ref> After the platform administrators closed the earning platform on January 16, 2018, and refunded the users' investments in BCC following a 92% coin value crash, confidence was lost and the value of the coin plummeted to below $1 from a previous high of nearly $525.

==History==
Bitconnect was released in 2016 with the goal of allowing users to lend the value of Bitconnect Coin in return for interest payments. The marquee program was the so-called lending platform where users traded [[Bitcoin]] for Bitconnect Coin and could lock in the instantaneous value of the coin for a set period of time while earning interest calculated daily. The interest payouts were determined by a so-called "trading bot". The trading bot was the most controversial piece of the Bitconnect.co system.{{Citation needed|date=March 2021}} The liquidity of the BCC cryptocurrency funded users' ability to exchange their earnings for Bitcoin.

On November 7, 2017, the government of the United Kingdom issued Bitconnect a notice with two months to prove its legitimacy.<ref name="finder" /><ref>{{cite web|url=https://beta.companieshouse.gov.uk/company/10278342/filing-history|title=BITCONNECT LTD - Filing history (free information from Companies House)|website=beta.companieshouse.gov.uk}}</ref>

On January 3, 2018, [[Texas State Securities Board]] issued a [[cease and desist]] to the company, calling it a Ponzi scheme, and citing failings in user earnings transparency, and misleading statements.<ref name="finder" /> Texas State Security Board and North Carolina Secretary of State Securities Division warned that Bitconnect was not registered to sell securities in their respective states.<ref name="finder" />

On January 17, 2018, Bitconnect shut down,<ref name="Wieczner" /><ref name="finder" /> and BCC prices crashed by 92% immediately after.<ref name="Fool" /> Bitconnect announced it would refund its loans.<ref name=":0" />

On January 31, 2018, a temporary restraining order froze Bitconnect's assets, expiring on February 13.{{cn|date=September 2022}} However, Bitconnect as an entity never actually existed, so it is unclear what assets Bitconnect has (or ever had). An alleged India-region leader (one level below founder) of Bitconnect, Divyesh Darji, was arrested in [[Delhi]], India, on August 18, 2018.<ref name="zdnet arrest">{{cite web|url=https://www.zdnet.com/article/alleged-bitconnect-head-arrested-in-dubai/|title=Alleged head of BitConnect cryptocurrency scam arrested in Dubai - ZDNet|last=Osborne|first=Charlie|website=[[ZDNet]] |access-date=October 27, 2018}}</ref> It is suspected that Darji is connected to well-known criminal entities involved in laundering so-called "[[Indian black money|Black Money]]" after the Indian government's [[2016 Indian banknote demonetisation|demonetization of the rupee]]. In 2019, Darji was arrested and released on bail in connection with a similar scam called Regal Coin.<ref>{{Cite web|url=https://www.independent.co.uk/life-style/gadgets-and-tech/news/bitcoin-scam-bitconnect-cryptocurrency-regal-coin-a8945291.html|title=Bitcoin millionaire 'on the run' after second cryptocurrency scam|website=[[Independent.co.uk]] |date=June 5, 2019}}</ref>

== Criticism and collapse ==
Bitconnect was suspected of being a [[Ponzi scheme]]<ref>{{Cite news|url=https://www.nytimes.com/2018/01/17/technology/bitcoin-virtual-currency-bubble.html|title=Bitcoin Falls Below $10,000 as Virtual Currency Bubble Deflates|last1=Popper|first1=Nathaniel|date=2018|work=The New York Times|access-date=January 18, 2018|last2=Bowles|first2=Nellie|language=en-US|issn=0362-4331|url-status=live|archive-url=https://web.archive.org/web/20180118010804/https://www.nytimes.com/2018/01/17/technology/bitcoin-virtual-currency-bubble.html|archive-date=January 18, 2018}}</ref> because of its [[Multi-level marketing|multilevel marketing]] structure and impossibly high payouts (1% daily compounded interest).<ref name="Fool">{{Cite news |url=https://www.fool.com/investing/2018/01/17/bitconnect-alleged-crypto-ponzi-scheme-shutters-it.aspx |title=BitConnect, Alleged Crypto Ponzi Scheme, Shutters Its Lending and Exchange Services and Plunges 92% |last=Williams |first=Sean |work=The Motley Fool |access-date=January 18, 2018 |archive-url=https://web.archive.org/web/20180118025950/https://www.fool.com/investing/2018/01/17/bitconnect-alleged-crypto-ponzi-scheme-shutters-it.aspx |archive-date=January 18, 2018 |url-status=live |language=en}}</ref><ref name=":0">{{Cite news|url=https://techcrunch.com/2018/01/16/bitconnect-which-has-been-accused-of-running-a-ponzi-scheme-shuts-down/|title=Bitconnect, which has been accused of running a Ponzi scheme, shuts down|last=Tepper|first=Fitz|work=TechCrunch|access-date=January 18, 2018|language=en|url-status=live|archive-url=https://web.archive.org/web/20180118001059/https://techcrunch.com/2018/01/16/bitconnect-which-has-been-accused-of-running-a-ponzi-scheme-shuts-down/|archive-date=January 18, 2018}}</ref><ref>{{Cite news|url=https://www.cnbc.com/2018/01/17/digital-currency-plunge-may-be-healthy-for-cryptocurrency-market.html|title=Digital currency plunge may be healthy for cryptocurrency market|last=Cheng|first=Evelyn|date=January 17, 2018|work=CNBC|access-date=January 18, 2018|url-status=live|archive-url=https://web.archive.org/web/20180118012442/https://www.cnbc.com/2018/01/17/digital-currency-plunge-may-be-healthy-for-cryptocurrency-market.html|archive-date=January 18, 2018}}</ref> Bitconnect interest fluctuated greatly with the volatility of Bitcoin, which its value was tied to.

The Bitconnect Coin was among the world's top 20 most successful cryptocurrency tokens<ref>{{Cite news|url=https://www.fool.com/investing/2017/07/20/the-20-largest-cryptocurrencies-by-market-cap.aspx|title=The 20 Largest Cryptocurrencies by Market Cap|last=Williams|first=Sean|date=July 20, 2017|work=The Motley Fool|access-date=June 22, 2018|language=en}}</ref> until its price collapsed after traders began losing confidence. BCC rose from a post ICO price of $0.17 to an all-time high of US$463 in December 2017; it declined to US$0.40 as of March 11, 2019. Bitconnect released outstanding loans at a rate of US$363.62 to the Bitconnect [[cryptocurrency wallet|Wallet]] in form of BCC. However, soon after that news the internal exchange price and liquidity collapsed resulting in a nearly complete loss of value.<ref name=":0" /><ref>{{Cite web|url=https://bitconnect.co/system-news/94/changes-coming-for-the-bitconnect-system-halt-of-lending-and-exchange-platform|title=Changes coming for the Bitconnect system - Halt of lending and exchange platform|date=January 16, 2018|website=BitConnect|archive-url=https://web.archive.org/web/20180118030000/https://bitconnect.co/system-news/94/changes-coming-for-the-bitconnect-system-halt-of-lending-and-exchange-platform|archive-date=January 18, 2018|url-status=live}}</ref><ref>{{Cite news|url=https://techscoop.in/2018/01/bitconnect-officially-shut-down-lending-platform.html/|title=Bitconnect Shut Down it's Lending Platform Officially for Good|last=Bhargav|first=Sushant|date=January 16, 2018|work=TechScoop.in|access-date=January 18, 2018|archive-url=https://web.archive.org/web/20180118181133/https://techscoop.in/2018/01/bitconnect-officially-shut-down-lending-platform.html/|archive-date=January 18, 2018|url-status=dead}}</ref>

==Legal issues==
On January 16, 2018, Bitconnect announced it would shut down its cryptocurrency exchange and lending operation after regulators from [[Texas]] and [[North Carolina]] issued a cease and desist order against it.<ref>{{Cite news|url=https://gizmodo.com/bitconnect-anonymously-run-crypto-exchange-crashes-af-1822144652|title=BitConnect, Anonymously-Run Crypto Exchange, Crashes After States Issue Cease and Desists|last=McKay|first=Tom|date=January 17, 2018|work=Gizmodo|access-date=January 17, 2018|archive-url=https://web.archive.org/web/20180117061255/https://gizmodo.com/bitconnect-anonymously-run-crypto-exchange-crashes-af-1822144652|archive-date=January 17, 2018|url-status=live|language=en-US}}</ref><ref name="bloomberg">{{Cite news|url=https://www.bloomberg.com/news/articles/2018-01-16/bitconnect-closes-exchange-as-states-warn-of-unregulated-sales|title=BitConnect Closes Exchange as States Warn of Unregulated Sales|last=Kharif|first=Olga|date=January 16, 2018|work=Bloomberg|access-date=January 17, 2018|archive-url=https://web.archive.org/web/20180117001520/https://www.bloomberg.com//news/articles/2018-01-16/bitconnect-closes-exchange-as-states-warn-of-unregulated-sales|archive-date=January 17, 2018|url-status=live}}</ref><ref>{{Cite news|url=https://nymag.com/selectall/2018/01/ponzi-scheme-bitcoin-site-bitconnect-shuts-down.html|title=The Rise and Fall of BitConnect, the Sketchiest Crypto Exchange|last=Swearingen|first=Jake|date=January 17, 2018|work=Select All|access-date=January 17, 2018|archive-url=https://web.archive.org/web/20180117144452/http://nymag.com/selectall/2018/01/ponzi-scheme-bitcoin-site-bitconnect-shuts-down.html|archive-date=January 17, 2018|url-status=live|publisher=New York Magazine|language=en}}</ref><ref>{{Cite news|url=http://www.nasdaq.com/article/crypto-news-update-20180117-00663|title=Crypto News Update|date=January 17, 2018|work=NASDAQ.com|access-date=January 18, 2018|language=en-us|url-status=live|archive-url=https://web.archive.org/web/20180117173753/http://www.nasdaq.com/article/crypto-news-update-20180117-00663|archive-date=January 17, 2018}}</ref> On January 31, 2018, a U.S. District Court, Western District of Kentucky, granted a temporary restraining order freezing Bitconnect's assets and "to disclose cryptocurrency wallet and trading account addresses, as well as the identities of anyone to whom Bitconnect has sent digital currencies within the last 90 days".{{citation needed|date=May 2019}}

In September 2021, the [[U.S. Securities and Exchange Commission]] sued Bitconnect, alongside its founder Indian Satish Kumbhani, American Glenn Arcaro who served as Bitconnect's lead national promoter in the United States from August 2017 to January 2018, and Future Money LTD, a company Arcaro created to lure into Bitconnect's lending program. The SEC alleged that Bitconnect defrauded U.S. investors a total of $2 billion.<ref>{{Cite news|last=Michaels|first=Dave|date=September 1, 2021|title=SEC Sues BitConnect and Founder, Alleging Massive Cryptocurrency Scam of World-Wide Investors|language=en-US|work=Wall Street Journal|url=https://www.wsj.com/articles/sec-sues-bitconnect-and-founder-alleging-massive-cryptocurrency-scam-of-world-wide-investors-11630535853|access-date=September 2, 2021|issn=0099-9660}}</ref><ref>https://www.sec.gov/litigation/complaints/2021/comp-pr2021-172.pdf {{Bare URL PDF|date=March 2022}}</ref><ref>{{Cite web|title=Cryptoexchange founder accused of defrauding investors of $2 billion|url=https://www.cbsnews.com/news/bitconnect-satish-kumbhani-sec-lawsuit-ponzi-scheme-two-billion/|access-date=September 2, 2021|website=www.cbsnews.com|date=September 2021 |language=en-US}}</ref>

Parallel to SEC civil charges, the [[United States Department of Justice]] had initiated criminal charges against Arcaro. On September 1, 2021, Arcaro pleaded guilty of criminal charges pressed by DOJ which includes conspiracy to commit wire fraud and criminal forfeiture.<ref>{{Cite web|date=September 5, 2021|title=US SEC charges Indian citizen for bitcoin scam|url=https://cryptovakil.in/bitconnect-scam-sec-charges-indian-satish/|url-status=dead|access-date=September 6, 2021|archive-date=September 6, 2021|archive-url=https://web.archive.org/web/20210906071840/https://cryptovakil.in/bitconnect-scam-sec-charges-indian-satish/}}</ref> The DOJ also indicted Kumbhani on various federal charges in February 2022, including money laundering and fraud.<ref>{{Cite web |date=2022-02-25 |title=BitConnect Founder Indicted in Global $2.4 Billion Cryptocurrency Scheme |url=https://www.justice.gov/opa/pr/bitconnect-founder-indicted-global-24-billion-cryptocurrency-scheme |access-date=2022-03-06 |website=www.justice.gov |language=en}}</ref>

On January 12, 2023, a federal district court in San Diego ordered that Arcaro pay $17 million in restitution to be distributed to approximately 800 victims. <ref>{{Cite web |date=2023-01-12 |title=Crypto Fraud Victims Receive Over $17 Million in Restitution from BitConnect Scheme |url=https://www.justice.gov/opa/pr/crypto-fraud-victims-receive-over-17-million-restitution-bitconnect-scheme |access-date=2023-05-12 |website=www.justice.gov |language=en}}</ref> He also agreed to forfeit more than $24 million, which could also be used in the future to repay victims. <ref>{{Cite web |last=Riggins |first=Alex |date=2023-01-13 |title=San Diego judge orders $17 million restitution payment in BitConnect pyramid scheme |url=https://www.sandiegouniontribune.com/news/courts/story/2023-01-13/restitution-biconnect-cryptocurrency-ponzi-scheme |access-date=2023-05-12 |website=San Diego Union-Tribune |language=en-US}}</ref>

== Internet meme ==
On October 28, 2017, Bitconnect held its first (and only) annual ceremony in [[Pattaya]], Thailand. During the event, an investor named Carlos Matos from [[New York City]] gave an [[Exuberance|exuberant]] presentation and testimonial about the website, which included him intensely screaming "Bitconnect!!" several times;<ref>{{Cite web|url=https://www.inverse.com/article/40894-bitconnect-carlos-meme-cryptocurrency|title='Bitconnect Carlos' Meme Is Everything Wrong With Cryptocurrency Hype|last=Paez|first=Danny|website=Inverse|date=February 2, 2018 |language=en|access-date=January 16, 2019}}</ref> the scene quickly became an [[Internet meme]]. Both Matos' meme and the questionable practices of Bitconnect were profiled by [[John Oliver]] and [[Keegan-Michael Key]] on the program ''[[Last Week Tonight]]''.<ref>{{Cite web|url=https://www.youtube.com/watch?v=g6iDZspbRMg |title=Cryptocurrencies|last=Oliver|first=John|website=Youtube|language=en|access-date=July 11, 2022}}</ref>

== See also ==
* [[List of cryptocurrencies]]
* [[OneCoin]]
* [[PlusToken]]
* [[USI Tech]]

== References ==
{{Reflist}}

== External links ==
*{{official website|https://bitconnect.co/}} ([https://web.archive.org/web/20181128120223/http://bitconnect.co/ last archived version, 28 November 2018])

{{Cryptocurrencies}}

[[Category:Blockchains]]
[[Category:Cryptocurrency projects]]
[[Category:Internet memes introduced in 2018]]
[[Category:Crypto Ponzi schemes]]
[[Category:Cryptocurrency scams]]
[[Category:Cybercrime in India]]
[[Category:Fraud in India]]

Bitconnect - Revision history

Ajay Kumar at 18:37, 25 September 2023