In the world of Bitcoin scams, nothing comes close to the Bitconnect Ponzi scheme. On January 16, 2018, Bitconnect had announced that they were shutting down it’s lending and exchange services for good, which resulted in a heavy price drop.
What Was Bitconnect?
For those unfamiliar, Bitconnect was, at one point, one of the top 20 ranked cryptocurrencies with a market cap valuation of over $2.60 billion. The cryptocurrency was launched in November 2016 and had provided a service that would allow users to lend their Bitcoin to their Bitconnect trading bot to receive daily profits.
The company had offered investors to earn up to 40% per month, an impressive rate of return which many traditional investors would suggest is entirely impossible to deliver month after month. In fact, the more cash you ‘lended’ the bigger and faster profits you were set to achieve.
They had also offered a 1% interest rate compounded daily. This would mean that if you invested $1000, in three years time this would be worth over $50 million. This alone should have alarm bells ringing for potential investors.
Even Vitalik Buterin was skeptical with their profit claims and was the first to mention the words ‘Ponzi Scheme’ in relation to Bitconnect.
Yeah, if 1%/day is what they offer then that’s a ponzi.
— Vitalik Non-giver of Ether (@VitalikButerin) November 2, 2017
The company had employed a very aggressive marketing tactic that incentivised users to bring their friends along in the scam. Users were granted a multiple level affiliate marketing rewards to any cash they could bring to the network through affiliation. In other words, they had created a pyramid scheme that would allow users to get paid further from other users they introduced to Bitconnect.
However, on January 16, 2018, everything started to crumble…very quickly. The Bitconnect team had announced that they would be closing all lending and exchange services. All active loans were cancelled automatically and the funds were then converted to Bitconnect coins at a price of $363. This was the first domino in a series of events that caused BCC to fall to zero.
Users were quick to sell their BCC coins back into Bitcoin as BCC was worthless after the team had shut down their services. This caused BCC to drop aggressively from $255 down to $19.28 in a matter of days.
This was by far the biggest scam to come out of the cryptocurrency industry and the effects are still felt today as many investors lost a lot of money.
Will Bitcoin SV Follow BCC Footsteps?
Bitcoin SV has been feeling the hear as of recently after a number of the largest exchanges have announced that they will be de-listing Bitcoin SV from their exchanges.
This comes days following the announcement that Craig Wright, founder of BSV, had stated that he would be suing crypto user @Hodlnaut for libel and defamation after he had started the hashtag #CraigWrightIsAFraud. Wright had said that he would be coming after anybody who goes against his claim that he is Satoshi Nakamoto himself.
The key players within the cryptocurrency industry took up arms against Wright and threated to de-list his project if he continued to go ahead with the lawsuit against the Twitter user. Well, it appears that they have followed through with the threat after Binance announced, this week, that it would be delisting BSV.
— Binance (@binance) April 15, 2019
This had caused BSV to fall aggressively, dropping almost 15% following the announcement. Currently, the market is down by a total of 30% over the past 7 days after price action dropped from a high above $72.50 to a low around $54.83.
Will BSV Fall To Zero?
Although this price drop is not quite as aggressive as the BCC price drop, if this continues, BSV could end up in the same boat as BCC and fall to zero.
Crypto users are not the most forgiving people in the world. Once a project has shown signs of centralization, corruption or downright ignorance, the majority of users prefer to leave the project alone.
If Craig Wright continues to contest the industry against the backlash, we can expect further exchanges to follow suit and de-list BSV. If it is difficult for investors to gain access to BSV it will be hard for BSV to continue to grow. Furthermore, if the fear sets in that BSV could be de-listed from all exchanges then this would create a similar effect to what happened with BCC. If the de-listing continues, the fear could set in for investors causing them to jump ship and sell all their coins whilst they still have the chance to do so.
Do you think BSV will continue to be de-listed from further exchanges over the coming weeks? Will this coin go to zero? Let us know in the comments below!