From what I understand Bitconnect is trying to become an unregulated exchange like BTC-E once was. This would mean allowing people to trade multiple currencies against each other. In 2013 the high risk high reward attitude was normal in the space and in that setting BTC-E launched. People used the exchange for years but it was not shut down until the government shut it down. BTC-E did not run off with the money but this is not to say they were not corrupt. Bitconnect charges a fee for exchanges and these fees can be used to provide interest for lenders. If it is an exchange then the lenders are liquidity providers.
In my opinion they should transition into something regulated if they are allowed to but who knows if they can because this is a competitive space and there are other exchanges plus banks which probably don't like what they are doing. So that argument in my opinion is truly believable for why they don't come out of the shadows, but even if they were in the open and working directly with the government it wouldn't mean their token is more profitable to hold or that their business model will be more profitable under scrutiny.
I think if you want trust then stick your money into a bank account. Crypto is not safe, never was safe, and risk free profit does not exist. So if you want high returns you must take high risk. Bitconnect is high risk high return which is the only way to get a big win off an investment.
Crypto is about high risk high return investments. Crypto is not about 'trust' and I don't know why you believe Bitcoin and crypto was founded on trust. I say always do not invest or lend what you cannot afford to lose.
If you can afford to lose $100 then putting $100 in Bitconnect is the same risk as putting it into an ICO. If you can afford to lose $1000 then Bitconnect is the same risk as putting it into an ICO. If you can afford to lose $10,000+ then lending to Bitconnect is the same risk as lending to an ICO.
So it is the same level of risk. Most businesses (9 out of 10) fail. So you have a 90% chance of losing your money. At the same time you tend to reveal high risk low return investments like Salt or you show me Bitshares which if it were just launched would make sense but isn't really any better of an opportunity than Bitconnect is now.
The typical investor in an ICO is either a person who truly believes the ICO will change the world, or someone who believes they can get rich, or someone who believes a combination of the two. I cannot imagine anyone would think any ICO is going to make them rich while also being low risk and if they do believe it then they don't understand investing.
The main risks of Bitconnect are a government shut down, or the developers discontinuing. I do not think they will run out of money based on math. I do trust the math that the network will be profitable but I do not think an unregulated exchange will be able to last without going regulated or being shut down sooner or later.
No one should put 50% of their savings into Bitcoin or any crypto. No one should trust any developer(s). No one should trust any code produced by any developer(s). Once you realize it is not an industry based on trust, or based on regulation, then you understand what Bitconnect appeals to. Bitconnect appeals to those who want to self regulate the financial system and it even says that is the goal of what Bitconnect wants to do. I don't know if that is a wise goal, but even if it is not, I also don't trust banks which charge us interest for giving them money, nor do I trust the companies integrating into that because if you think about it what put you into debt if you are in debt now? Was it banks or was it crypto? So if it was the banks why would you turn to them to get you out of debt?
The choice is yours though. If you feel safer with your fiat in a bank then I'm in full support of you staying there. If people want to risk their money in crypto and they lose, well that is what it takes also to have the chance to get rich, this is the way it is if you invest in a startup with 90% chance of failure.
My personal reasoning for my rant against banks is that those institutions are the main institutions charging me interest right now, and crypto institutions are willing to pay interest to me. Fiat is lower risk and if you have a lot of it then you don't need to keep taking risks to simply invest in very low risk low or moderate yield investments, but if you aren't a multi-millionaire you never will become one if you don't take a gamble at some point.