BitConnect, a lending platform for the cryptocurrency space in which lenders could deposit bitcoin and lend out its “tokens,” has announced it is shutting down.
In a statement on their website, the team behind BitConnect announced on Tuesday that the operations on the lending exchange would be halted.
This is to inform all community members that we are closing the Bitconnect lending and exchange platform. We are closing the lending operation immediately with the release of all outstanding loans. With release of your entire active loan in the lending wallet we are transferring all your lending wallet balance to your BitConnect wallet balance at 363.62 USD. This rate has been calculated based on last 15 days averages of the closing price registered on coinmarketcap.com. You are free to withdraw your BitConnect coin currently in QT wallets that was used for staking as well. We are also closing BCC exchange platform in 5 days. In short, we are closing lending service and exchange service while BitConnect.co website will operate for wallet service, news and educational purposes.
Although the statement ensured token holders that they would be compensated $363.62 USD for each token they owned, many users are reporting that they have yet to receive their funds. Analysts in the cryptocurrency industry predict that many users will not receive any compensation at all from the organization.
BitConnect blamed the shut down on “continuous bad press” and “cease and desist” letters that they received from the Texas State Securities Board and the North Carolina Secretary of State Securities Division. Many analysts have called BitConnect a Ponzi scheme because of its multi-level referral system, which rewarded active users each time they recruited a new user.
Surprisingly, BitConnect claims that the planned Initial Coin Offering for a newer version of their trading platform, called BitConnect X, will be launched at some point in the future.