The biggest cryptocurrency scam in the world

Cryptocurrencies are mostly unregulated at the moment, with vaporware projects competing against revolutionary technologies like Bitcoin and Ethereum for investment.

This is evident in the case of BitConnect – which is the 25th biggest cryptocurrency in the world and has a market capitalisation of over $2 billion.

The cryptocurrency was found to be engaging in fraud and the company behind the currency has been served a Cease and Desist order by the Texas State Securities Board.

The emergency cease and desist order was issued on 4 January and states that BitConnect is engaging in fraud and misleading investors.


The term “high-yield investment programme” is defined as “an investment scam that promises unsustainably high return on investment by paying previous investors with the money invested by new investors”.

With its lending programmes and focus on earning large returns as quickly as possible, BitConnect fits into this definition.

The securities board found that BitConnect was committing fraud within numerous areas, including its “lending” and “staking” programmes.

With regards to the staking programme, the board noted that:

Respondent BitConnect is intentionally failing to disclose financial information about the obligation to pay investors who stake BitConnect Coins in the BitConnect-QT wallet, including, but not limited to, the source of funds that will be used to pay investors interest at a rate of up to 120% per year.

The intentional failure to disclose this information constitutes the intentional failure to disclose material facts.

Its market capitalisation and adoption paired with its classification as a fraudulent investment scheme makes BitConnect one of the largest cryptocurrency scams on the market.

BitConnect price graph
The price of BitConnect over the past year.

The blockchain community’s foremost members, including Vitalik Buterin, have accused BitConnect of being a Ponzi scheme designed to defraud investors.

The company, which owns a controlling stake in its own cryptocurrency, is extremely secretive and has not disclosed any information about its developers, owners, or the development of its “cutting-edge trading bot”.

The Texas State Securities Board is not the only party on the BitConnect case.  The UK Companies House recently sent BitConnect Ltd a notice of dissolution, giving the company two months before its name is struck off the register and its assets seized by the Crown.


The negative attitudes – and legal findings – toward BitConnect are easier to understand when its promises of massive investment returns are examined.

BitConnect promises large returns on its staking and lending programmes, which require users to send Bitcoin to the company.

The Bitcoin is then converted into the cryptocurrency BCC, which is controlled by BitConnect.

Customers then cannot access their initial capital until a fixed period has ended.

A snapshot of the profits promised from BitConnect’s lending programme are listed below.

BitConnect lending profits

Blockchain developers have argued that the cryptocurrency has no unique or valuable technology behind it, and instead only functions as an ultra-modern flavour of a Ponzi scheme.

BitConnect advocates have in turn cited their massive return on investment, which can be improved by the platform’s affiliate programme which lets customers earn more by getting others to sign up.

Despite the lack of fundamentals behind the BCC token, investors continue to flock to the cryptocurrency.

The hype around BitConnect was on display at its 2017 annual event, which forgoed technical announcements in favour of testimonials about returns on investment – as shown below.


BitConnect has also launched an ICO for another cryptocurrency named BitConnectX.

While there is no whitepaper or detailed fundamentals behind BitConnectX, BitConnect asserts that BitConnectX is “an open source, blockchain based, decentralized cryptocurrency that enables instant payments to anyone with minimum transaction fees”.

Many of these terms are used by vaporware or dishonest ICOs when trying to raise funding, but further inspection of the BitConnectX token required to eradicate these reservations is impossible due to its lack of technical documentation.

Many of BitConnect’s investors may be seasoned crypto investors looking to get in early enough to profit from the potential Ponzi scheme, but many newcomers and less-knowledgeable cryptocurrency buyers may lose their money to BCC.

Following Bitcoin’s meteoric rise in 2017, mainstream investors are now branching out to altcoins which seem reliable or have a high market cap.

BitConnect, with its $2-billion market capitalisation, is one of these coins.

Certain market capitalisation trackers like CoinCodex have delisted BitConnect, however, in an effort to prevent users from being exposed to the cryptocurrency.

CoinCodex described BitConnect in its delisting notice as it being “unclear who is behind the project, exactly how it works, or if BCC has any actual use”.

Now read: We’re mining Ethereum again – This is how much we are making

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The biggest cryptocurrency scam in the world