
SEC warns famous crypto-currency backers - tooba
http://www.bbc.co.uk/news/technology-41845185
======
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...](https://www.youtube.com/watch?v=dXI5eGJK-
CY&feature=youtu.be&t=802)

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

~~~
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.

------
mdotk
Why only a warning? These greedy celebs know exactly what they are doing. Nail
one of them and teach the rest a lesson.

------
Animats
Well, one advantage of a celebrity endorsement is that when the thing tanks,
there's someone with money to sue. If you can show that (big-name celebrity)
was paid for an endorsement, and didn't admit that up front, they're now a
party to the scheme. We may see some big names go broke over this.

------
thisisit
Discussed here:
[https://news.ycombinator.com/item?id=15605591](https://news.ycombinator.com/item?id=15605591)

------
PatientTrades
When famous celebrities get involved in speculation that is the ultimate sign
of a bubble. Similar to when pro athletes like A-rod and paul pierce starting
making day trades back in 2004. As usual mom and pop investors will be left
holding the back. Regulation will be the nail in the coffin for crypto
currencies in America which will probably be a debate topic for 2020 election
cycle

~~~
ojr
the US Stock market and bitcoin is in a bubble, hedge wisely

~~~
bonestamp2
People were saying bitcoin was in a bubble when it went up to $50. People who
say this don't understand that a new economy is emerging, an economy that
exists only on the blockchain. Traditional economies will be left behind.

Therefore, I do agree that the stock market is in a bubble -- in that sense
the USD is in a bubble. It's not going to burst anytime soon, but do yourself
a favor and hedge your bets... pick up some bitcoin so you've got a stake in
the new economy when your value in the existing one crashes (you don't have to
buy an entire coin).

~~~
paulgb
Those of us who were saying that at $50 still think it's a bubble at $7000.

~~~
bonestamp2
I respect your opinion, but I'd like to explain why I disagree. First of all,
I think you'll agree that something is worth whatever someone else will pay
you for it. So, if we're in a bubble then that means in the future, someone
will not be willing to pay $7000 for one bitcoin.

But, with bitcoin's limited supply and increasing demand, and it's purchasing
not being limited by credit availability (like housing, cars, etc) then
chances are good it's demand will continue to increase and therefore its value
will continue to increase.

If that doesn't happen then that means bitcoin's design is flawed -- it was
literally designed to go up in value over time because it was invented out of
frustration with fiat currency that nearly always goes down in value over time
(inflation). The blockchain isn't the only brilliant thing about bitcoin.

------
at-fates-hands
_The SEC said any virtual coins or tokens bought by investors through an ICO
were subject to the same laws governing the sale of stocks and shares sold via
mainstream stock markets._

I thought the whole point of crypto currency was that it WASN'T regulated and
so how is the government able to do this, let alone say this with any
authority?

~~~
toufka
The government doesn't regulate the USD or NASDAQ shares, but currencies,
income, value, and ownership.

Cryptocurrencies are _entirely_ regulated, already.

~~~
libertymcateer
> The government doesn't regulate the USD or NASDAQ shares...

Yes, it most certainly, unequivocally does. (I believe this reinforces your
point.)

~~~
umanwizard
I think the point was that even if stock exchanges _were_ totally unregulated,
normal laws and regulations could still be applied to stock ownership. (And
even if they weren't, common law on property ownership still would)

