High yielding investment platform Bitconnect (BCC) have announced they are closing their lending facilities immediately and its exchange operation within five days.
Bitconnect have blamed the closure on two Cease and Desist letters from the Texas State Securities Board and the North Carolina Secretary of State Securities Division which, according to the project team, lead to “bad press (that) has made community members uneasy and created a lack of confidence.”
Buterin and Lee Warnings
They also highlighted recent DDos attacks that have targeted their platform making it “unstable and created more panic inside the community.”
Although all of the reasons cited by the company are from external forces, a number of high profile figures within the industry such as Vitalik Buterin and Charlie Lee have been warning for sometime that Bitconnect carried the characteristics of a ponzi scheme.
Announcing the news at a time when the cryptocurrency markets are suffering their largest single absolute drop could not mask the dramatic price plunge of the BCC token. At the time of writing the value has plummeted from an all-time high in excess of $430 to $21 USD.
Bitconnect say they will convert investors balance in their lending wallets to BCC tokens in the Bitconnect wallet based on a rate of $363.62, this being the average based on the last 15 days closing prices on coinmarketcap.com.
Without apparent irony, Bitconnect concluded that their website will stay open for “educational purposes” and allow API access to merchants websites.
In the closure statement, the company stressed that BCC tokens would be able to be traded within the exchange created by the ongoing BitconnectX ICO.
It remains to be seen how the BCC token will hold value of some description when the platform it serves has closed but, perhaps more importantly, it raises serious issues for anyone considering investing in the BitconnectX ICO itself.