Bitconnect gets issued an emergency cease & desist order
Texas has ordered the cryptocurrency exchange to shut down.
The State of Texas has issued bitcoin platform Bitconnect a cease and desist letter, ordering the company to stop offering sales in that state.
The state has ordered Bitconnect to stop trading in Texas until it is registered with the Securities Commissioner or has been granted an exemption from registration.
Texas has also appeared to accuse Bitconnect of fraud, ordering the company to stop "engaging in any fraud in connection with the offer for sale of any security in Texas".
However, this is not the first time Bitconnect has received such an order and has yet to issue a statement on the cease and desist.
Two months ago, the UK threatened to shut down Bitconnect if it couldn't prove its legitimacy.
Is Bitconnect a scam?
Bitconnect has long been accused by many in the crypto community as being a scam or ponzi scheme, with Ethereum founder Vitalik Buterin and Litecoin founder Charlie Lee both speaking against the bitcoin investment platform.
Bitconnect promises traders on its platform 1% interest, compounded daily. This would then mean that assets of $1000 could be worth over $50 million in three years.
That figure is what the likes of Buterin and Lee have quoted as being a clear sign of a classic ponzi scheme.
Bitconnect works by users buying their own BCC coin with Bitcoin. They are then promised a guaranteed return on their BCC coin after 4-10 months. The more you invest, the higher the percentage growth on your investment.
Since Bitconnect's model began gaining prominence in the middle of 2017, there have been numerous copycat versions that have popped up based on different cryptocurrencies. Notably, these include XRPconnect (Ripple based) and Ethconnect (Ethereum based), which offer the same return rates, generally considered to be too good to be true.
Bitconnect's market cap is currently sitting around US$2.7 billion, ranking it the 19th most valuable of all currencies.