Bitcoin Lending Platform NovaChain Hacked | Did Novachain Exit Scam?
In this article, I want to discuss what lending platforms are, how they work, and what to watch out for. Additionally, we are going to dive into the most recent lending platform that potentially exit scammed, Novachain.
Nothing should be considered financial or investment advice. Enjoy the ride.
Bitcoin Lending Platforms
If you are new to the crypto scene then this is an important lesson for you. There was a surge of these lending platforms that really started to show up in late 2017 and early 2018. A lending platform is a business model where investors buy out tokens, lend them back to the same company as the market makers, and expect to get a residual passive income for the staked tokens over time.
In simple terms, people invest in a company and receive tokens for it like any other ICO or token sale. Then, they lock the tokens into the platform provided by the same company. The structure of locking your tokens up, then enables you for interest or passive income based off of the amount of tokens that are staked. The only problem is, most of the platforms that were even functional would only payout in the native token of the platform. This means there was almost zero liquidity for your interest and tokens since they were not traded on any major external exchange.
NovaLend or NovaChain
The formerly known lending platform, NovaLend, rebranded in mid 2018 to the now known company, NovaChain. The core team decided to change the name in order to get away from the negative sentiment of lending platforms and break into the trading bot market.
Do not be confused, NovaChain started as a lending platform. After a failed launch and troubled attempts to get the project running in the intense bear market of 2018, the project rebranded and changed direction. It was a great decision by the team, because the price of the token went from a mere $0.02 to around $1.50 in a few months after the shift. This was partially due to the lack of liquidity on sell orders and lacking an external exchange system.
Following the shift and success of the automatic trading bots, NovaChain decided to try their luck at producing a lottery game on their native platform. Novalitto was the name where players could gamble away crypto on a provably fair system through smart contracts on the Ethereum Blockchain. This project was short lived and soon they turned their full attention to passive income from more trading bots due to lack of interest in the gambling games.
NovaChain in 2019
Thus far in 2019, Novachain was off to a decent start. I actually kept up with their telegram channel and know many investors that had been with the project since its infancy. Throughout the dead heat of the bear market, the developers and team never showed signed of exit scamming, quitting the project, or wanting to run away with the investors money. They put tons of time into developing their platform and building out not only rigorous trading algorithms, but also ecstatically appealing dashboards.
Their newest launch was called the REX trading bot that was supposed to have higher yields or returns over time accompanied with more consistent trading across multiple exchanges. These bots were linked to Binance, Bittrex, Huobi, and many other top exchanges providing adequate liquidity. One other achievement was also the addition of an external exchange for trading the Novachain tokens that were earned over time.
Novachain Exit Scam
With all of this development and hard work paying off, there is no clear signs for why the team would exit scam at this stage in the game. The official telegram channel reads:
Dear Novachain Community
We were forced to close all telegram channels in order to create new accounts for.the future use we will communicate all the new channels here so stay tuned!
And no we did not exit scam we are here to stay!
Your Novachain Team
-Novachain telegram channel
If the team were to have exit scammed, they would have done it in 2018 after they had received the money. There was absolutely zero incentive for the team to spend over a year of their time building a well working product with design in mind to simply close shop. Especially with Bitcoin surging and the market recovering at this point.
Novachain Did Not Exit Scam?
This leads me to my next conclusion and suspicion that Novachain did not exit scam and simply were hacked. The other telegram message on their official page reads:
Dear Novachain Community,
In order to apply a full restore we need to shutdown all our servers to be able to perform the full backup restore.
We have lost all our credentials from the hack, in order to be safe we need to change everything we had to be able to execute a new installation with new credentials.
We wil keep you posted on the progress on our official announcement channel.
Thank you for your patience,
-Novachain Telegram Channel
Your NOVACHAIN Team
Now, there is no proof that the team did not exit scam, and obviously no proof currently if they did. The only thing investors are left with is their last messages and the people that are connected with the internal team running the show.
The only other people that are being put to the test are the Youtubers that helped promote the product and platform. It is my full belief that none of the Youtubers that I have found meant any harm or had any reason to believe the platform would shut down.
Regardless of what did happen, there has been nearly no lending platforms that have successfully launched and provided what they claim they could. Let this be a stern lesson to all of the newer investors in this space, stay away from any type of lending platform, passive ROI structure, or traditional interest based staking away from your own wallets. Protect your crypto and make sure it is always safe, with you.