The UK registrar of companies has threatened to shut down the popular Bitcoin investment site BitConnect.
The company was launched in late 2016 as a Bitcoin lending investment platform. Recently, BitConnect’s market cap took a dip from over $2 billion to under $600 billion according to Coin Market Cap.
The investment platform guarantees its lenders to earn up to 40 percent total return per month, which means one-percent ROI per day. When Ethereum founder Vitalik Buterin was asked to express his thoughts regarding the scheme, he initially said that he was not aware of BitConnect but later said that the investment platform does indeed resemble a Ponzi scheme.
“Yeah, if $1%/day is what they offer then that’s a Ponzi,” Vitalik Tweeted.
Vitalik’s comments had initiated a heated discussion over BitConnect’s legitimacy since then, with people comparing it with other companies accused of a similar scam. Now that the UK has warned to shut down the company, it turns out that Vitalik might be right.
According to an official filing on the British Companies House website, BitConnect has two months to prove “cause to the contrary” until the order is formally enforced.
If BitConnect fails to comply with the decision, the government agency will strike off its registration and seize its assets.
“Upon dissolution all property and rights vested in, or held in trust for, the company are deemed to be bona vacantia, and accordingly will belong to the crown,” the document said.
Many suspects that BitConnect likely hoards its funds abroad, however, there is no solid evidence confirming the allegation.
Although the filing makes no mention of any names behind the company, another document revealed that BitConnect was registered by a British man named Ken Fitzsimmons. The same document disclosed that Fitzsimmons holds 75 percent of the shares in BitConnect.
Strangely, Fitzsimmons’ name does not appear anywhere on the company’s site and it is still unknown what is his involvement in BitConnect. Cryptocurrency enthusiasts find this lack of information really suspicious and are much concerned. One user went too far and reported BitConnect for illegal activity to the British government.
Soon after the UK Companies House strike-off statement became a hot topic at Reddit, the price of BitConnect Cash (BCC) fell from $287 to under $230 (though the price has climbed to $245 since then).
Redditors have begun noticing loads of red flags on BitConnect’s site since then, including a schematic diagram explaining company’s revenue structure.
Cryptocurrency fanatics have started comparing BitConnect to another Bitcoin lending investment alternative Bitpetite, that has long been accused of similar allegations. Bitpetite disappeared suspiciously two weeks ago along with its investors. The lending platform has since then closed its Facebook, Telegram and Twitter accounts.
1% interest compounded daily would make your $1000 investment worth $50 million+ in 3 years, does that sound sustainable to you?
— Ponzi crypto coins (@bccponzi) 2 November 2017
Well cryptomaniacs, you have to be careful with your money because as the saying goes: All that glitters is not gold.
Meanwhile, BitConnect has carried on promoting itself and attracting new investors. The company hosted its annual networking event in Thailand on October 28. The event was a grand one with dances, acrobats and music. The ‘cheesy gala’ didn’t provide enough information about company’s future plans or current financial situation but rather focused on entertainment. Instead, the headline of the event was a cringe-worthy hyping performance by one of the event hosts.