bodyType

customContents

entityId

entityUuid

articlePageQuery

filter

article

articleBaseAdvertisingInfoArticle

articleListArticle

articleSeoArticle

hooksArticleAcknowledgementGateOverlayArticle

hooksTrackPageViewArticle

hooksContentInterestArticle

articleLinkingDataContent

hooksAmpRedirectArticle

articleSchemaContent

liveArticle

advertZone

sentiment

contentLock

topics

types

sections

paywallTypes

createdDate

publishedDate

urlAlias

moreOnThisArticles

sponsorType

commentCount

authorLocations

authors

corrections

displaySlideShow

multimediaEmbed

printHeadline

seriesContainer

articleSpeeches

socialHeadline

headline

images

flag

firstTopic

glossary

flattenTypeIds

image

relatedLinks

relatedNewsletters

__typename

sponsor

pdfFiles

seriesReverseOrder

series

disableOffPlatformContent

published

updatedDate

summary

subHeadline

body

keywords

readingTime

customTimezone

liveContents

Samuel Chan

The sudden closure of a Hong Kong-based bitcoin trading company may have left as many as 3,000 local investors with combined losses of HK$3 billion.
Lawmaker Leung Yiu-chung was approached by about 30 concerned clients of MyCoin, which once invited investment guru Jim Rogers as its guest speaker.
They will file reports to the police on Wednesday on the grounds that deception was involved in a pyramid-style Ponzi scheme packaged as bitcoin trading.
The HK$3 billion figure is based on an earlier statement by the company that it had 3,000 clients in Hong Kong, each investing an average HK$1 million.
“No one seems to know who is behind this,” said a woman surnamed Lau, who saw her HK$1.3 million investment in four bitcoin contracts evaporate. “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.”
All clients were given no written document or receipt as proof, apart from a trading account on the company’s trading platform.
Investors said they were lured by promises of a HK$1 million return in four months for buying a HK$400,000 bitcoin contract which would produce 90 bitcoins on maturity. Extra profits and prizes such as a Mercedes-Benz car or cash prizes would be paid if an investor found more new clients.
Lau said clients were talked into buying contracts by real estate agents, law firm clerks or insurance agents. Lau said she did not give her approval but the law firm clerk opened an account in her name after receiving a cheque from family members.
An 81-year-old woman surnamed Chan said she recovered only HK$1.2 million on her HK$3 million investment on seven bitcoin contracts. “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,” she said. The biggest loss by a single client was said to be HK$50 million, while some mortgaged their properties to invest.
Last year, MyCoin staged events at luxury hotels, including a roadshow in Macau in August featuring Rogers.
In December, the company changed its trading rules, forbidding investors to cash in all their bitcoins unless they manage to find more clients.
MyCoin also did not pay according to the full bitcoin price, now valuing it at only HK$20 per unit compared to the international bitcoin price of around HK$1,770 (US$227) yesterday.
Last month, the company posted a notice at its office in Tsim Sha Tsui saying it would be closed for renovation from January 3. The front door has been blocked by a wooden plank.
“We are a bit worried that police will refuse to handle the cases because there were no written records,” said Leung, who plans to seek a meeting with the Monetary Authority to demand regulation of bitcoin trading.
Simon Lee Siu-po, a senior lecturer at Chinese University’s business school, said the government should make laws to monitor virtual currencies.
“The regulatory framework has failed to catch up with times,” he told RTHK on Monday. “Electronic tellers for bitcoin have emerged ... It has actually become an online currency.”
Lee said monitoring of trading platforms for online currencies could take reference from the framework on online casinos.
“Many of these [casinos] operate from overseas but we can look at where the transactions are conducted to bring them under monitoring,” he said.
“Even if their servers are located abroad, monitoring is still possible under our laws.”
Lee said some investors compared bitcoin to foreign exchange investment but warned that the virtual currency involved greater risk because it is not backed by an economy in the way foreign currencies are.
The value of bitcoin has plummeted from its historical high of US$1,124 in November 2013 to as low as US$181.45 last month.
Additional reporting by Lai Ying-kit


Hong Kong’s biggest crypto exchange HashKey wins listing nod in test of investor appetite

Experts doubt China will lift bitcoin mining ban despite uptick and excess energy supply

Global stablecoin surge highlights overlooked risks in crypto finance

Bitcoin’s bruising month shows the perils of going mainstream

Bitcoin

Investors fear HK$3b losses in closure of bitcoin trading company

Mrs Chan, one of 30 clients who will go to police. Photo: David Wong

News

Hong Kong

Claims of deception as 3,000 investors count cost of MyCoin closure


The sudden closure of a Hong Kong-based bitcoin trading company may have left as many as 3,000 local investors with combined losses of HK$3 billion.


Update | Investors fear HK$3b losses in closure of bitcoin trading company

Claims of deception as 3,000 investors count cost of MyCoin closure