Investing in cryptocurrencies is like playing the ponies. Virtually everyone is taking a gamble to get rich quick here. Every other day, a new breed of altcoins is thrown into the market in the hopes that naive investors will take the bait. It is unsurprising that there are now more pump-and-dump cryptocurrencies out there than we can count.
In the following report, I’ll be talking about two sister cryptocurrencies that seem likely to leave investors with a double whammy of misfortunes in 2018.
A Pump-and-Dump Ponzi Scheme About to Blow Up?
The first cryptocurrency, Bitcoin, was introduced as a revolutionary technology that promised to alter the dynamics of the financial world, where money-hungry banks control the flow of money. Other promising ventures that followed—for instance, Ethereum—vowed to similarly revolutionize the corporate world. Despite being groundbreaking technologies, it took them years to earn investor confidence.
Today, sadly, investors are ready to throw their money at anything that promises to deliver overnight riches, even if it doesn’t offer anything of value.
A wave of pump-and-dump cryptocoins—or “PnD coins,” as they are often referred to in the cryptoworld—have flooded the market.
The creators of these altcoins (read: swindlers) sell the idea that their cryptocurrencies, like Bitcoin, are also built upon some unique disruptive technology that will soon take the world by storm. Except, they are all duds. Yet gullible investors are doling out their savings on them.
As more and more investors fall for their deception, prices of these altcoins get pumped up. Soon afterward, the creators dump the coins, leaving behind poor bagholders.
This has been going on in broad daylight, right under the nose of government authorities, because they don’t interfere in the unregulated cryptocurrency markets until asked to. Since there are no checks and balances, the market participants have been left to their own devices.
The result is that there are now far too many PnD coins in the market to keep track of. Some of these have already met their ultimate fate, like PlexCoin (PLX), whose assets have recently been frozen by the U.S. Securities and Exchange Commission (SEC) after complaints were filed against its scammy operations. (Source: “A brand-new cybersecurity watchdog just shut down a $15 million cryptocurrency scam,” Business Insider, December 4, 2017.)
Others are getting red-flagged by the cryptocommunity, like Tron (TRX), which has been accused of plagiarizing the work of other cryptographers. (Source: “Tron’s Whitepaper is Copied, Plagiarized,” HackerNoon, January 8, 2018.)
So cutting straight to the chase, the two cryptocurrencies I am advising investors to be wary of are sisters sharing the same origin.
The first is BitConnect (BCC).
What Is BitConnect? How Does BitConnect Work?
BitConnect is not your average pump-and-dump cryptocoin. It’s a pump-and-dump Ponzi scheme!
Not just me, creators of well-established cryptocurrencies like Ethereum and Litecoin are likewise saying so (more on that shortly).
Quite simply, BitConnect is an exchange for buying, trading, and lending BitConnect coins. You buy the coins on BitConnect’s platform in exchange for fiat currency or bitcoins. In turn, you are promised to get paid interest for holding your coins or for lending them to other BCC holders.
On a cursory look, it seems like a legitimate investment. BitConnect uses terms like “trust,” “self-regulation,” and “financial independence” in its marketing materials to lure the average Joes and Janes. But once you dig deeper, many red flags appear.
Red Flag #1: You need at least $100.00 to buy in. Wait, is this an exchange or an online casino?
Red Flag #2: You can’t withdraw your invested funds for up to 299 days, depending upon the size of your investment. Hmm, interesting!
Red Flag #3: There’s no information as to where BitConnect invests your funds or how it generates the returns it promises you. Do you smell something fishy yet?
Red Flag #4: The creators hold the majority of the coins. In other words, they can dump the coins in the open market at any time to extract all the profits and run away, leaving investors with a crash to deal with.
Reg Flag #5: The identity of its founders and the country of its origin remain a secret.
Red Flag #6: Government authorities are beginning to take notice. Two days ago, the North Carolina Department of Secretary of State issued a temporary cease and desist order to BitConnect. (Source: “Cease & Desist Orders,” North Carolina Department of Secretary of State, January 9, 2018.)
Red Flag #7: Finally, it may not seem like a big deal but the use of poor grammar on the web site and fake comments in the discussion sections just add to our suspicion that this project is not being operated by a legitimate company.
From where I see it, BitConnect may be the Bernie Madoff of the digital world. It’s only a matter of time before its scheme starts to unravel.
Here’s what Ethereum founder Vitalik Buterin and Litecoin founder Charlie Lee—two of the most revered industry veterans—have to say about BitConnect.
Like any Ponzi scheme, this one cannot sustain itself in the long run. BitConnect will soon run out of money to pay for the promised interest payments to its investors. This is probably why its team has cooked up another brilliant plan to swindle more money to keep this house of cards from falling.
Here’s an upcoming pump-and-dump altcoin you must avoid in 2018.
Is BitConnectX ICO a Scam, Too?
Just as we watch BitConnect get entangled in its own web of deception, its creators are launching another pump-and-dump cryptocurrency.
BitConnectX (BCCX) is their latest venture, for which they are selling new coins for $50.00 apiece in an initial coin offering (ICO). This ICO is estimated to raise over $500.0 million if all of their 11.76 million ICO coins sell out. And at the pace they are fooling investors, chances are that they’ll end up wrapping up a lot more.
Just on the second day of its ICO, BitConnectX tweeted that it sold out of its daily quota of ICO coins. That’s about 261,333 coins, raising over $13.0 million in one day.
Are investors really buying this ICO with both hands, or is BitConnectX just lying to pump up demand? Well, who knows?
Here are a few red flags I spot in this pump and dump cryptocurrency.
Red Flag #1: No BitConnectX white paper has so far been made public. We have absolutely no clue what technology this coin is built on or how it will work.
Red Flag #2: Again, you must spend a minimum of $50.00 to buy a BitConnectX coin. How exactly did it achieve that value? We don’t know.
Red Flag #3: Finally, it has been created by BitConnect. Rewind back to the last subheading for details. Enough said.
Analyst Take
With over 1,300 cryptocurrencies trading out there, not each one of them is a unique take on blockchain. Many are just cheap knock-offs of the truly valuable digital currencies. So, investors must be vigilant when investing in these cryptocoins.
BitConnect and BitConnectX are two top pump-and-dump cryptocurrencies investors must avoid in 2018. We’ll be on the lookout for more such schemes to keep our readers updated.
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