Deadcoins: BitConnect, The Fallen King of High-Yield Investment Fraud | BTCMANAGER
Bitcoin, Blockchain & Cryptocurrency News
Once beloved, now forsaken, BitConnect was the hottest thing in the market for a good year before the broader market realized this was a wolf in sheep’s clothing. People all over the world fell victim to the exuberance of the scheme, offering a whopping one percent daily compounded yield. BTCManager dives into the nitty-gritty of BitConnect and how it managed to thrive for so long.
The Mother of Crypto Scams
BitConnect, founded in 2016, was allegedly set up by two Indians: Satish Kumbhani and Divyesh Darji. With an all-time high market cap near $3 billion, it has gone down in history as the most high profile crypto swindle to exist.
A most unusual Ponzi, BitConnect allowed investors to lend out the value of their BCC tokens in return for an interest of one percent a day. If you do the math, that’s a yearly return of 37x or an annual lending yield of 3700 percent.
Someone who isn’t well versed with investment and economics might not comprehend just how unsustainable that business model is. Unless of course, people were borrowing BCC at a rate higher than 3700 percent – which they weren’t.
In reality, the “lent out” tokens were given to other lenders who put money into the platform before them; from there on, the pyramid scheme continued to grow and thrive, growing from $.14 per token on January 1, 2017, to $463 on December 29, 2017.
At long last,