(BlockBar) The rise and collapse of BCC (BitConnect), the originator of pyramid selling in the blockchain industry, concerning 2.5 billion US dollars.
Since the birth of block chain technology and digital encrypted currency, it seems that there has been viewed as “fraud” and “crime”. In July this year, BitConnect, an encrypted currency website, came online quietly, triggering another discussion in the digital encryption market. BitConnect, once known as the famous Ponzi scheme in cryptocurrency industry, has shown signs of revitalization after it disappeared for more than a year.
Compared with many pyramid selling of digital currencies today, BitConnect is not the largest in terms of the amount involved or the number of participants. But BitConnect has undoubtedly the biggest negative impacts on the whole industry. BitConnect is the “ancestor” of pyramid selling in terms of confusing the concepts of digital encrypted currency, designs of multi-level pyramid selling structure with digital currency.
BitConnect has even affected India’s total ban on encrypted currency nationwide to some extent. At the end of 2016, in order to combat the growing black market, the Indian government abolished banknotes denominated at 500 rupees and 1,000 rupees. This blatant “wealth search” policy caused panic among the public. Stock index plunged, cash shortage, bank runs, and people needed a new value storage carrier. Darji, one of the founders of BitConnect, saw the opportunity. He founded the company in 2016 and launched BitConnect at the beginning of 2017. The total number of BitConnect was 28 million, of which 18 million were sold to users. In the digital encrypted currency bull market in 2017, BitConnect achieved tremendous success with a market capitalization of more than $2.5 billion.
But by the end of 2017, the Indian authorities began investigating BitConnect. Most operators of BitConnect chose to take refuge abroad. Even some prominent figures and politicians were arrested. Darji himself was arrested by Indian police. At that time, the Indian government began to take a negative attitude towards encrypted currency, believing that Bitcoin and other encrypted currencies will lead to an increase in terrorist financing, money laundering and tax evasion, and will seriously undermine the anti-money laundering (AML, FATF) framework, as well as market integrity and capital control. In April 2018, the Central Government of India (RBI) issued a ban on banks, payment service providers and non-bank financial companies from providing encrypted currency-related services to individuals or businesses.
Nowadays, pyramid selling still exists in the block chain industry, showing the characteristics of cross-border, high concealment, large number of participants and large amount of money. Due to most digital encryption currencies and pyramid selling currencies have no strict boundaries , it is difficult to distinguish. Therefore, in the face of this kind of temptation, we should be particularly sober in order not to let the fraud have an opportunity to take advantage of.
Weekend is the most representative female writer in the blockchain industry. She is known for her keen news capture ability and is good at English writing of blockchain news in the Chinese region.