Bitcoin firm HXCex being probed after customer says he lost HK$67,000

One alleged victim says he is out HK$67,000, while company seems to have ceased work

PUBLISHED : Monday, 23 June, 2014, 4:57am
UPDATED : Monday, 23 June, 2014, 9:50am

Police are investigating the disappearance of tens of thousands of dollars worth of the virtual currency bitcoin in a move that could open the floodgates for more potential victims to come forward.

Scrutiny has fallen on the conduct of industry newcomer Hong Kong Crypto Exchange (HKCex), whose operation appears to have ground to a halt. Customers said they have been unable to reach the company, which opened for business last month, and its website returns an error message.

The inquiry comes as Hong Kong hosts its first major conference on bitcoins starting tomorrow.

Dominic Rivers, 34, a former IT engineer, reported that he had lost HK$67,000.

A police spokeswoman said: "The informant reported that he stored some virtual currency … in a company providing services on storage and trading in virtual currency in mid-May but discovered later he was unable to retrieve money from the company. Investigations are under way."

It is understood there may be more potential victims on the mainland.

Welcoming the probe, Rivers said he hoped that the authorities would take internet fraud seriously. "I fear that to them it's just new-fangled technology, and they are behind the times so they don't know how to deal with it, don't understand it and so ignore it," he said.

HKCex spokesman Lavin Lam, in an e-mail last month, said: "We are an honest and transparent business [and] have all the necessary permits and licences to conduct this activity." Attempts to contact the company again in recent days have failed.

The rising value of bitcoins over the past month puts Rivers' loss nearer HK$80,000.

A Post inspection of the company's claimed address at 56 Belcher Street in Kennedy Town found no links to the firm.

When HKCex announced it had secured investment on two occasions totalling US$27 million, it remained secretive about its anonymous backers, going against the industry trend.