MyCoin Ponzi Scheme - Hong Kong-based bitcoin exchange MyCoin may be a ponzi scheme and around 3,000 investors are worried after the company closed unannounced.
According to a report from the South China Morning Post, MyCoin closed suddenly, disappearing with about HK$3 billion (387 million) in investor funds.
In retrospect, the MyCoin ponzi scheme had been obvious. In September the company altered its term of services; forbidding customers from withdrawing their funds. Clients would only be able to do so if they persuaded more customers to invest in the company.
MyCoin also promised investors exorbitant prizes like a Mercedes Benz car if they brought in new customers.
"No one seems to know who is behind this," an investor told the publication. "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 clients."
MyCoin executives cannot be contacted, their phone numbers have been disconnected although their site seems to be in operation.
MyCoin offices have been closed since Jan. 3, with a notice saying the company is renovating the building.
MyCoin's website only describes the company as "the world's first bitcoin trading, e-commerce, mining machines, leisure games, bitcoin mall and as an integrated platform to provide comprehensive integration services for global bitcoin users."
According to IBTimes, the MyCoin ponzi scheme became more apparent when around 30 clients visited lawmaker Leung Yiu-chung to question him about the fact that the company did not give them receipts or any written document to prove their investment.
"I shouldn't have been so greedy," said Chan, an 81-year-old investor who was lured into buying HK$400,000 bitcoin contracts. "I was told by my real estate agent that the profit would be over HK$2m after one year."
Chinese authorities are yet to set regulations for the use of crypocurrencies, and many are expecting the MyCoin ponzi scheme to be a catalyst. On Monday, the Hong Kong Monetary Authority warned the public against investing in virtual currencies due to their 'speculative nature'.
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