MyCoin director quit one month before bitcoin platform changed trading rules

Clients facing losses claim man behind bitcoin trading platform also switched shares offshore

PUBLISHED : Monday, 09 February, 2015, 5:38pm
UPDATED : Tuesday, 10 February, 2015, 8:08am

The sole director of the company which out-of-pocket MyCoin clients say controls the bitcoin trading platform resigned one month before it was said to have changed trading rules to stop investors cashing in all their bitcoins.

Companies Registry records show William Dennis Atwood as the only director of Rich Might Investment Ltd – to which many MyCoin clients made out cheques as payment to MyCoin – resigned on November 10 last year.

Atwood also transferred all of the shares he held on the same day to a British Virgin Islands-based company called Fascinating Horizon Overseas Ltd, the records show.

The clients claim Atwood was chief executive of Kryptogroup which controls, among other entities, MyCoin and a bitcoin mining centre called Kryptomine Cloudhashing.

A woman named Wong Lok-yan, listed as a director for 167 companies, replaced Atwood as Rich Might Investment’s sole director, according to the records. Wong became a director for many of the companies last year.

Since December, the 30 clients who have now sought the help of lawmaker Leung Yiu-chung say they have been unable to cash in all the bitcoins generated under the contract they claimed to have bought from MyCoin. The company was also said to have started valuing the bitcoins in the platform lower than the international bitcoin price.

MyCoin now value its bitcoins at only HK$20 per unit compared to the international bitcoin price of around HK$1,727 (US$222) on Monday.

The aggrieved clients, who claim MyCoin is a pyramid scheme packaged as bitcoin trading, said they had been unable to contact the company’s management, while sales staff at higher levels claimed they too had been the victims of deception.

While police are monitoring developments, a source said investigations would not start until the MyCoin clients filed their reports. Any police probe could also depend on a range of factors including whether the transactions took place in Hong Kong.

Simon Lee Siu-po, a senior lecturer at Chinese University’s business school, said the government should make laws to regulate trading in virtual currencies.

“The regulatory framework has failed to catch up with the 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 be based on the framework for 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.