BitConnect, a once-promising crypto entity, has lost nearly 90 of its value, as its price has fallen to $26.00 in the wake of announcing the closure of its exchange and lending operation amidst legal problems with U.S regulators. The currency’s market capitalization has fallen to $175,637,617, according to coinmarketcap.com. A total of $17.517 million worth of the currency has traded in the last 24 hours.
BitConnect announced on Tuesday the immediate closure of its lending operation and that of its exchange platform in five days. The announcement said the website will remain open for “wallet service, news and educational services.”
Regulatory Challenges Emerge
The company gave three reasons for its decision to close: regualtory scrutiny, DDoS attacks and bad publicity.
A Texas securities regulator issued a cease and desist order, claiming the company committed fraud for not clearly identifying its principals and the sources of funds to pay investors 120% interest per year
North Carolina followed Texas by ordering BitConnect to stop soliciting offers to purchase or sell any securities in the state. The Texas and North Carolina cease and desist orders have undermined the platform’s legal continuation, BitConnect stated on its website.
The note blamed outside forces for the DDoS attacks that caused panic, making the platform unstable. In addition, negative publicity has created a lack of confidence in the platform and made the community uneasy, the post noted.
Critics Pile On
Charlie Lee, the creator of Litecoin, publicly stated in December that he refused to invest in BitConnect, saying it seems like a classic Ponzi scheme.
A month earlier, Ethereum founder Vitalik Buterin indicated the promised returns made BitConnect a Ponzi.
BitConnect: We Will Survive
The statement said the services closures does not signify the end of the BitConnect community and that it will continue to offer other cryptocurrency services in the future.
BitConnect said it will continue to support its digital token after closing its lending platform and exchange, claiming the BitConnect X ICO is still functional. An upcoming exchange platform on the website will list its cryptocurrency token BitConnect Coin (BCC).
Since February of 2017, the price gradually rose to a record high of $437.31 on Dec. 29, 2017, then began its rapid fall in early January.
Featured image from Shutterstock.
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