CryptoWatch: Bitcoin’s recent drop underlines a major fear: fraud in the cryptocurrency market

Famed investor Warren Buffett has a saying about the aftermath of periods of unfettered market enthusiasm: “You never know who’s swimming naked until the tide goes out.”

That idea appears to be particularly pertinent for bitcoin BTCUSD, +0.04% and the cryptocurrency market, which has recently seen a number of allegations of fraud and dubious activity pop up as virtual currencies faced their most severe slump in months.

On Wednesday, BitConnect, an investment platform linked to the so-called blockchain, announced that it was shutting down, resulting in a more than 90% decline in the coin pegged to its business, known as “BCC”.

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