Litecoin founder Charlie Lee and Ethereum co-founder Vitalik Buterin weighed in on the controversial investment platform BitConnect late this week.
Crypto fans have long questioned the program’s validity. With Bitconnect, investors are encouraged to stake their coins in the currency’s core wallet, earning interest on their initial investment as a result. BitConnect isn’t the first crypto to attract users with proof of stake returns, but they do differ in that the platform promises a 120% annual return on each individual investment. This last figure has many in the community raising eyebrows, and rightfully so as it sounds like a textbook ponzi scheme.
Charlie Lee and Vitalik Buterin certainly think so. On November 30th, Charlie Lee criticized the platform, tweeting:
I’ve been asked what I think about BitConnect. From the surface, seems like a classic ponzi scheme. I wouldn’t invest in it and wouldn’t recommend anyone else to.”
The following day, Michael Novogratz, a former Fortress Investment Group member, echoed Lee’s sentiments, tweeting that “Bitconnect really seems like a scam. an old school ponzi.” Vitalik Buterin promptly agreed with Novogratz’s diagnosis, justifying his own condemnation of BitConnect by tweeting the following:
Their official videos are effectively promising 1% daily returns and touting this as the primary benefit of the project. Ethereum and Bitcoin, on the other hand, are backed by a proven and consistent record of 200-700k daily txs and $100k-4m daily txfees.”
Buterin’s criticisms of BitConnect date back to early November, but Charlie Lee’s input is a fresh take on what has become a controversial topic. As two of the premier figures in the crypto community, their words carry weight, and their criticisms are likely to leave impressions on investors and enthusiasts alike.
When we couple these criticisms with evidence of falsified accounts and calls from the UK government for Bitconnect to close its operations, it’s enough to make us skeptical of BitConnect’s model. Invest at your own risk.
Bitconnect Image Via Shutterstock