The New Zealand shooter profited from a notorious crypto pyramid scheme

Mourners pay their respects to a victim of the New Zealand shooting.
Mourners pay their respects to a victim of the New Zealand shooting.
Image: Reuters/Joseph Campbell
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In his 74-page screed, Brenton Harrison Tarrant, the suspected New Zealand shooter, claims he invested in a cryptocurrency called BitConnect. Longtime crypto observers know BitConnect as an infamous pyramid scheme, which falsely promised a 1% daily interest payment. The project is better known for generating memes than investment returns. However, Tarrant says he profited from BitConnect’s rise and used his riches to travel the world.

Crypto is just a sliver of the New Zealand shooter’s story, but his identity as a young, uneducated man fluent in internet culture meant he was the ideal mark for an online get-rich-quick scheme like BitConnect. Less typically, it appears the shooter got in and out of BitConnect before suffering any financial harm himself.

BitConnect was founded in 2015, per Crunchbase, and its cryptocurrency was publicly released in 2016. Little is known about the company’s founders, which include Satish Kumbhani, and Divyesh Darji, both natives of India. Some crypto watchers identified BitConnect as a scam almost from its start, but the company folded only after US state regulators served it with cease and desist letters. BitConnect closed its “lending operation”—the heart of the scheme—in January 2018, although the scam was notorious enough to warrant a mention from John Oliver. Darji, who supposedly led the company’s Asian business, was arrested in New Delhi in August and earlier this year the FBI posted a notice seeking victims in its BitConnect investigation.

On March 6, another crypto scam, OneCoin, was exposed when one of its operators was arrested at Los Angeles International Airport by the FBI. The Bulgarian-run Ponzi scheme similarly exploited uninformed retail investors and promised rewards to promoters.

In the internet age, investing has never been easier and “FOMO” has never been more pronounced. That combination fueled the bitcoin craze of 2017, and while online brokerage platforms have retained some semblance of order, the crypto boom took place outside the scope of regulation. As a result, in the last few years, both legitimate entrepreneurs and grifters have raised money across the world, and there has been little that financial authorities can do to stop them.

Since cryptocurrencies aren’t subject to the same restrictions as transferring money from a bank account, crypto capital can flow freely—for better and for worse. In 2017, the heyday of initial coin offerings (ICOs), all a person needed was a website, a crypto wallet, and the word “blockchain.” Then they watched as the speculators poured in, hoping to strike digital gold.

Due to the global nature of crypto fundraising, entrepreneurs located in jurisdictions with minimal oversight while targeting investors virtually anywhere. In an industry as complicated as cryptocurrency, it was also easy for scam artists to crib technical documentation without being noticed by ravenous buyers. Breathless media coverage and the absence of reliable reporting didn’t help either.

But one of the main drivers of crypto pyramids was an age-old tool: referrals. Crypto “experts” rocketed to stardom on YouTube, offering reviews of new tokens and trading advice. Rather than doing their own research, many investors relied on online testimonials and celebrities who joined the craze.

As with any pyramid scheme, there were also people who actually did make money, including—apparently—Tarrant. But while he escaped unscathed, BitConnect left behind real victims of its financial crimes. It will take years for them to deal with the aftermath.



No bitcoin futures for March, says Cboe. Cboe Futures Exchange announced March 14 it is not adding a bitcoin futures contract for March 2019, potentially because of underwhelming investor interest in the financial product. The exchange is “assessing its approach with respect to how it plans to continue to offer digital asset derivatives for trading.”

Takeaway: Cboe’s bitcoin derivatives product was not made as widely available as others, like the CME’s bitcoin futures. Due to the limited market, as well as concerns about Cboe’s narrow price reference—a daily auction at the Gemini crypto exchange—the futures just didn’t gain traction. Although futures could still play a role in whether the SEC approves a bitcoin-linked ETF, it appears unlikely that crypto derivatives will return to the popularity they enjoyed shortly after their launch. ↘️