Cryptocurrency: China selfie app owner Meitu warns of heavy losses after a meltdown in bitcoin and ether prices
- Meitu started investing in bitcoin and ether in March 2021, saying they have room to appreciate or surpass gold or precious stones as store of value
- Stock has lost 89 per cent of value in Hong Kong trading over the past 12 months, erasing HK$3.1 billion of capitalisation
Chinese selfie app owner Meitu warned investors its losses could widen by as much as 154 per cent in the first half this year because of its foray into cryptocurrencies, which suffered a meltdown over the past two months amid concerns about recession.
Hong Kong-listed Meitu, whose apps allow users to touch up their selfies, expects to lose between 274.9 million (US$41.1 million) and 349.9 million yuan for the six months ended June 30, 2022, according to an exchange filing on Sunday. Net loss was 137.7 million yuan in the same period last year.
The company has spent about US$100 million to buy 31,000 ethers and 940.89 bitcoin since March last year, whose value has depreciated to about US$32 million and US$18 million respectively, based on their market value on June 30, the company said.
The cryptocurrency market is experiencing a shakeout, with popular tokens including bitcoin and ether at one point losing more than half of their values. Sharp increases in interest rates in the US and other major economies are fanning recession fears and a sell-off in cryptocurrencies. China’s state-backed blockchain networks called it the greatest Ponzi schemes,
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Is cryptocurrency too risky for China?
Retail investors who invested in cryptocurrencies during the market boom last year are nursing deep losses, while a growing number of crypto services are now mired in financial distress. Celsius Network, one of the biggest crypto lenders, continues to block customer withdrawals, while crypto hedge fund Three Arrows Capital has filed for bankruptcy in New York.