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)
Olivia is a graduate of Villanova University where she studied Economics and History, minoring in Gender and Women's Studies. She also has experience working with federal legislatures on health care policy, women's issues, and Internet safety.