The closure of MyCoin, a bitcoin trading company based in Hong Kong, has closed leaving investors to face a potential $3BN (HK) loss, equivalent to $347 MN U.S. dollars. Approximately 3000 investors will be affected.
MyCoin clients were promised a return on investments of up for HK$3 MN. However, in December, the company made changes to its terms of service which prevent customers from withdrawing funds. Furthermore, certain company operations have been accused of resembling a “pyramid scheme” in that clients were offered reward incentives to recruit new investors. Rewards reportedly included cash prizes as well as Mercedes-Benz vehicles.
One client says,
We were told by those at higher tiers [of the scheme] that we can get our money back if we find more new clients.”
MyCoin had promised a few months ago that the company would soon be listed on the Hong Kong stock exchange and operated a bitcoin ATM.
Industry experts say this incident may lead to a push for greater regulation of Bitcoin in Hong Kong as another Hong Kong-based trading platform, GBL, disappeared in November 2013, losing $4.1 MN in client investments. It is likely these events abroad will also affect how regulators in the U.S. approach the shaping policy on the use of virtual currencies.
Read more here- “Hong Kong Warns Over Digital Currencies Amid Alleged Bitcoin Fraud,” (Michele Price, Reuters)