MyCoin Closed – Investors Worry - Essay Example

MyCoin Closed: Investors Might Lose HK$3b

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Hong Kong based bitcoin trading company closed suddenly, leaving the clients worried about loss.

When MyCoin, a Hong Kong-based bitcoin trading firm, shut down suddenly it concerned around 3,000 local investors. The investors are afraid that a combined loss of HK$3 billion was incurred.

Thirty concerned MyCoin clients approached Leung Yiu-chung, a local lawmaker. They decided to file police reports on Wednesday based on the grounds that they were deceived by a pyramid-style Ponzi scheme pretending to be a bitcoin trading firm.

The HK$3b figure was calculated from a previous company statement. The firm had 3,000 clients and of them each invested HK$1 million on average.

Lau, a woman who saw her investment of HK$1.3 million in 4 bitcoin contracts disappear said that no one has any idea about who is involved in the scheme.

She said, “Everyone says they too are victims … but we were told by those at higher tiers [of the scheme] that we can get our money back if we find more new clients.”

The clients were provided any written document. The only receipt of proof they have is from the trading account on MyCoin’s trading platform.

According to the investors, they were lured with promises that they would get HK$1 million return in 4 months after buying a HK$400,000 bitcoin contract. This contract would help earn 90 bitcoins on maturity.

Moreover, MyCoin promised that investors would get additional profits and prizes like cash prizes or a Mercedes-Benz car if he introduced new clients.

Lau said that law firm clerks, insurance agents or real estate agents talked the clients into purchasing contracts. She explained that the law firm clerk made an account in her name even though she did not approve.

Chan, an 81-year-old woman, said that she could recover only HK$1.2 million of the HK$3 million investment from 7 bitcoin contracts.

She said with regrets, “I shouldn’t have been greedy. I was told by my real estate agent that the profit would be over HK$2 million after one year.” The greatest loss by a single client was HK$50 million.

MyCoin staged events at luxury hotels last year. The company changed its trading rules in December, forbidding the investors to cash in all of their bitcoins unless they helped find more clients.

The company posted a notice last month at its office in Tsim Sha Tsui announcing that it would be closed from January 3 for renovation and the office front door is blocked with a wooden plank.

Leung is planning a meeting with the Monetary Authority but is concerned because they do not have any proof. He said, “We are a bit worried that police will refuse to handle the cases because there were no written records.”

A senior lecturer at Chinese University, Simon Lee Siu-po, thinks the government should pass laws to monitor digital currencies. “The regulatory framework has failed to catch up with times. Electronic tellers for bitcoin have emerged … It has actually become an online currency.”