BitconnectX: Bitconnect's attempt to Scam Investors Through ICO
During the cryptocurrency market crash this week, we saw one of the most well-known and longest running ponzi crytpocurrencies eventually closing its doors.
Many people thought it was only a matter of time before Bitconnect would collapse and in its wake, leaving a swathe of unfortunate investors who thought that they were investing in a legitimate enterprise.
In the end, the pyramid scheme relied on stable and growing cryptocurrency prices in order to operate the lending. The coin was already facing a great deal of scrutiny from the community and even law enforcement.
Now it seems as if the operators of the scheme have turned their sites on another venture, and they have not even bothered to use a new name. There is currently a BitconnectX ICO that is taking investments through their coin offering.
Let's take a look at this ICO and see whether it is a mere naming coincidence or whether it is a likely scam.
What is BitconnectX?
BitconnectX claims to be an "open source, blockchain based, decentralized cryptocurrency". Although this may sound impressive at first, this is an almost generic description of how most cryptocurrencies operate.
However, something that they say that almost immediately raises suspicion is the claim that they will offer interest to those people who hold the funds in their wallets and try to maintain "network security".
We are always suspicious of cryptocurrencies that offer "interest" on holdings of that coin. This is because it is almost always the wording that is used by other lending coins like Bitconnect.
They claim that they will be using both a proof-of-work (PoW) and proof-of-stake (PoS) algorithms in order to achieve their interest paying requirements.
Exactly how they will achieve the mining with both PoS and PoW is hard to tell. This is mainly because we cannot locate a single whitepaper for this ICO. This is something that nearly every ICO (even the scams) have somewhere on their site.
What Will the ICO Look Like?
The ICO is raising funds right now as part of their roadmap. The fund raise started on the 10th of January and is going on till the 23 February. Below are some of the key numbers as part of the ICO:
- Maximum Supply: 49 Million
- ICO Price: $50
- Current Supply: 14,700,000
- Total ICO Distribution: 11,760,000
- Reserve Fund: 2,940,000
- Daily ICO Sell limit: 261,333 Coins for 24 hours.
This looks pretty plain and vanilla on the face of it but there were one or two points that should raise alarm bells for the potential investor. Usually when an ICO claims a price for their tokens, they list it in terms of an exchange for another cryptocurrency.
In this case, they have quoted the price of the tokens at $50. This is quite a surprise and further adds credence to the fact that this is less than a reputable ICO.
If one were to register in order to take part in their ICO, you can see that they take three different cryptocurrencies. These are Bitcoin, Litecoin and of course Bitconnect! Below is a screenshot of the user admin panel.
Of course, they claim that they had sold 261,333 tokens BCCX tokens today. One can only hope that this is a ruse in order to create a sense of legitimacy. It would indeed be quite depressing to know that they had taken in over $1 million today.
Other Information on BCCX
What is of course not surprising is that there are sparse details on exactly who is behind the operation, who the developers are and from where they are operating.
There are no contact pages nor are there any standard Terms & Conditions, investor disclosures and all of the other normal legal documents one would expect in a crowd sale of any nature.
Although they have included a FAQs section, this is incredibly sparse with limited details. The FAQs mainly just go over information that is otherwise on the website somewhere else.
We have reviewed numerous ICOs and there has never been one with such sparse information on everything from the technology to the company and founders. We would have reached out and asked for a whitepaper if we could even locate contact information.
Is BitconnectX a Scam?
While we cannot conclusively say with 100% accuracy that it is a scam or a ponzi, everything that we have seen points us to that conclusion. There is no information on the company, founders or technology.
Moreover, the lack of a whitepaper should be a major red flag for investor who is thinking of contributing funds for the ICO. It is also not surprising that this has cropped up at a time that Bitconnect has collapsed.
It is also quite suspicious to us that they would accept Bitconnect BCC tokens in part of their fund raising efforts. No self-respecting cryptocurrency project would accept near worthless tokens as part of the funding.
Lastly, the name is clearly not a coincidence and was most likely developed to be associated with Bitconnect. It may be the original operators who had purchased the Bitconnect "x" domain or it could be a copycat scammer who wanted to siphon off some of those looking to invest in Bitconnect.
There are hundreds of high value ICO projects that are currently raising funds with dedicated developers and sophisticated technology. Rather focus your attention, time and of course money on these.
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.