Another BitCoin market closes
Posted by: Timothy Weaver on 02/10/2015 10:22 AM
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South China Morning Post reported the closure of Hong Kong-based MyCoin, which is believed to have left as many as 3,000 investors facing a total of HK$3 billion ($387 million) in losses.
Unlike the closing of Mt.Gox, this closure seems to be a function not of the vagaries of the market, but rather due to classic financial fraud.
Clients were offered huge returns as much as HK$3 million on a $2 million investment. But the terms were changed in December preventing customers from withdrawing their funds. In addition, clients were offered rewards for recruiting new customers to invest in the company -- behavior consistent with the operation of a pyramid scheme.
One client, who lost $168,000, had this to say: "No one seems to know who is behind this. 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 new clients."
While McCoin was promising to double individuals investments, the value of BitCoins has fallen from a high of $1000 at the end of 2013 to just over $200 this month.
Unlike the closing of Mt.Gox, this closure seems to be a function not of the vagaries of the market, but rather due to classic financial fraud.
Clients were offered huge returns as much as HK$3 million on a $2 million investment. But the terms were changed in December preventing customers from withdrawing their funds. In addition, clients were offered rewards for recruiting new customers to invest in the company -- behavior consistent with the operation of a pyramid scheme.
One client, who lost $168,000, had this to say: "No one seems to know who is behind this. 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 new clients."
While McCoin was promising to double individuals investments, the value of BitCoins has fallen from a high of $1000 at the end of 2013 to just over $200 this month.
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