[flashdance]

If you guys want to check out the most ludicrous scam I've seen, take a look at Bitconnect. It's a 2 billion dollar literal (and I mean literal) ponzi scheme.

They promise 1%/day returns but only if you deposit your money on their platform for several months, they have a referral program with ridiculously high bonuses, and they have no real justification for the returns other than a bunch of technobabble about their "amazing" proprietary trading software. Of course, this doesn't explain why they don't just use it themselves without needing other people's money.

Also, the owners are anonymous.

I swear, there's so many red flags it feels like I'm playing minesweeper.

The most damning things about this scheme is their own marketing. Take a look at this video from their "conference": https://www.youtube.com/watch?v=dXI5eGJK-CY&feature=youtu.be...

For the sake of full disclosure and identifying my bias I do hold some cryptocurrency.

[OzzyB]

> https://www.youtube.com/watch?v=dXI5eGJK-CY&feature=youtu.be...

This makes "developers! developers! developers!" look like childsplay xD

[wott]

I always wonder, when I see this kind of character, what happens each evening when they go back home and sit in their sofa, what goes through their mind?

[jermaustin1]

I think Grandmaster Flash said it best:

> White lines; vision dreams of passion; flowing through my mind

[modeless]

I think this is even worse: these people are selling hosted Ponzi schemes as a service https://hyipsoftware.com

It is not a joke, there are real Ponzi schemes out there based on this stuff.

[Bromskloss]

> Of course, this doesn't explain why they don't just use it themselves without needing other people's money.

Not that it saves Bitconnect's case, but taking in money can be legitimate, can it not? That's what every money manager and every bank does. Even if you could just trade with your own money, you might benefit doing your thing with a larger sum of money (even if you get just a small piece of the profits).

Edit: Hilarious, and uncomfortable, video, by the way.

[flashdance]

That's correct, but this isn't the same!

I've seen some folks on reddit mention you can get 7% of someone's deposited money as a bonus if you refer them. Only a ponzi scheme can sustain that sort of aggressive networking. This sort of referral system has been done before, for GAWminers, Pbmining, and Hashie--all ponzi schemes which later collapsed, of course!

[rothbardrand]

I think the trick is that you "get" that %7 as an account credit, but since you're never going to be able to withdraw the money...

these days all a ponzi needs to do is have enough shill accounts claiming that they were able to withdraw successfully, and drowning out those who complain.

[Tuna-Fish]

> Not that it saves Bitconnect's case, but taking in money can be legitimate, can it not?

Only if the returns are low enough. If you had a way of making 1% a day returns, taking in large amounts of someone else's money would be really dumb.

[Bromskloss]

Isn't the issue rather how your rate of return scale with the amount of funds under management?

[notahacker]

The issue is that anyone with an investment strategy capable of earning consistent returns of over 1% per day, will (i) have no difficulty raising capital by offering much lower payouts to their investors (ii) will maximise their personal profit far more easily by paying out only a small fraction of returns to investors, and retaining the rest to reinvest for themselves rather than offering 1% a day returns and stupidly generous referral schemes to try to attract more funds to "manage".

Of course, the reality is that nobody earns rates of returns like this at any scale whatsoever except by robbing Peter's new funds under management to pay Paul

[wbl]

As the joke goes, Sharpe ratio is inversely related to size of marketing department.

[stefantheard]

That's hilarious, and also has to be true. Most successful firms don't exist outside of some mild exposure and a basic splash/landing page to entice potential candidates for recruitment.

[akgerber]

A classic example: https://www.rentec.com/

[ryanmarsh]

Take a look at this video from their "conference"

Wait... is that room... empty?

[rtkwe]

Nah there's people there, not many it's set up with a lot of pretty large tables filling the space to make it feel more packed but there's definitely people there. Maybe a few hundred?

https://youtu.be/dXI5eGJK-CY?t=325

edit: This one is better and less seizure inducing. https://youtu.be/dXI5eGJK-CY?t=425

[Animats]

There are waiters, but not food. Maybe it was a free-drinks deal.

[api]

Hahahah... that video.

That kind of hucksterism is all by itself a very strong contrarian indicator.

[bonestamp2]

> They promise 1%/day returns

No, if you read their terms they promise nothing. They basically say the whole thing could blow up at any minute. That said, they have been around for a year. Maybe you're thinking about their earnings calculator where they use the average returns from the past 6 months to calculate approximate future earnings (which is close to 1% daily).

That said, I'm not sure it's a ponzi scheme exactly. When you buy traditional stock, you buy them with cash. When you buy their coin (their "stock" if you will), you give them bitcoin. Then you lend their coin back to them. So now they're holding the bitcoin and their own coin that you lent back to them. Now they have two assets with value that they can pay you a small percentage of. Bitcoin tends to go up in value, which again they can pay you a percentage of, not to mention buying their coin in general creates demand which drives the price of that coin up too -- more growth that they can pay a return on.

BCC (bitconnect coin) is also traded on half a dozen exchanges. So, there are a lot of legit companies taking a gamble on it if it's a ponzi scheme. Also, ponzi schemes don't normally give you an asset in return that you can exchange elsewhere that is documented on a public blockchain; bitconnect does (unless you lend that coin to their trading bot).

[flashdance]

> That said, I'm not sure it's a ponzi scheme exactly.

Red flags:

* Incredible, almost unbelievable returns

* A referral program to draw in new people

* Open-ended IPO, the platform has no limit on investment

* Incentives for individuals to invest more (seriously, you get higher returns for investing $10k versus $100, it makes no fucking sense)

* People are prevented from withdrawing their funds until they wait several months.

* Operators are anonymous

* No proof has been released that they're not a ponzi scheme. Why don't they have audited reserves? We're talking billions here.

Every single red flag shows that this platform is designed from the ground up to pay old investors with money from new investors. 1% a day is a completely ludicrous amount of money to make from day trading. It's such a shaky premise.

I'm sick and tired of people deflecting for these scumbags. And yes, it's happened before--it was a scam then, and it's a scam now. Here's a very much abridged list of other things that had those red flags:

GAWMiners, PBmining, Hashie, Paycoin, Lunaminer, Eobot, Scrypt.cc

Feel free to google them and tell me if they're still in business.

[52-6F-62]

1% a day as a boast is unfortunately nothing anymore.

I've been seeing ads for Bitcy.biz lately, too. Take one look at their promises, if you will. They're advertising all over the place now because of their bounty program -- ie. they'll pay between 0.025 and 0.5 BTC for hosting banner ads, making blog and facebook posts, etc, and people are biting.

For example, they have one program where they promise that if you put in a minimum of 0.05BTC for a period of no less than 100 business days, you will returned 7000% of your original investment (including your original investment). At today's prices that would mean for ~$351 USD that you lock in for ~5months, you will be returned $22000.

They're actively trying to scoop up all of the stupid. That or there's some thinly veiled money laundering schemes occurring all over the place now -- which wouldn't surprise me at all.

[api]

Money laundering is highly likely, as is flight capital. There's billions upon billions of dollars looking to exit from countries like China and Russia. This is kind of a type of money laundering since the goal is to evade capital controls and/or taxes at the sending or receiving end.

[52-6F-62]

It often looks that way to me, with so many shady ICO's as well. And let's not forget the Magnitsky Act which in North America is primed to prevent exactly those kinds of financial moves.

[bonestamp2]

I agree there are red flags. I didn't say it wasn't a ponzi scheme, I said it wasn't a ponzi scheme "exactly". There is a unique difference with bitconnect, where the value is backed by a real coin on a publicly traded blockchain.

I'm saying it's NOT a scam, I'm just saying we don't know... it's something new that we haven't seen before and it's an interesting discussion.

1% payouts aren't all that crazy when they're holding bitcoin (up 10% from yesterday) and they're holding their own coin (up 8% from yesterday).

[JumpCrisscross]

> There is a unique difference with bitconnect, where the value is backed by a real coin on a publicly traded blockchain

Ponzi mechanics have nothing to do with how the scheme's reserves are held.

> it's something new that we haven't seen before

Unfortunately, it's not. It's either a scam or a scheme so incompetent that it is practically identical to a scam.

[eli]

It's unfortunate that there is no practical way to bet against this thing, because I would gladly bet it goes to zero.