43 MyCoin clients seek police action over alleged scam
12-2-2015
■Leung Yiu-chung with investors at the Wan Chai police station
Monetary watchdog urged to ban sale of bitcoins in HK as investors fall victim to pyramid scheme
Forty-three
out-of-pocket clients of Hong Kong-based bitcoin trading platform
MyCoin filed reports to the police yesterday about what they claim was a
pyramid scheme packaged as trading in the digital currency.
More
clients are expected to follow suit this week, said lawmaker Leung
Yiu-chung, who has received requests for help from dozens of MyCoin
investors. At least five clients who contacted another lawmaker, James
To Kun-sun, also filed reports to police yesterday.
Leung said he
was upset by the Hong Kong Monetary Authority’s response that since
bitcoin is not a currency, it does not fall under its oversight.
“I
told the HKMA that bitcoin is more than just an investment product,” he
said. “In fact bitcoins can be used for shopping, which resembles [one
of the functions] of currency so I am of the view that the HKMA can do
more about this matter.”
Leung called on the authority to stop the sale of bitcoins in Hong Kong as some countries, including Thailand, have done.
Asked
if the fact MyCoin clients were not given written proof of purchase
would be a hurdle for any police investigation, lawmaker To said some
investors had written cheques to the company which controls MyCoin,
which should leave a paper trail.
He said computer records kept
at MyCoin could be used to match the clients’ transaction records to
prove they did have dealings with the company.
Leonhard Weese,
president of the Bitcoin Association of Hong Kong, said the government
had been clear from the start that bitcoin is a “very risky” investment.
“An
outright scam is you lose everything, whatever happens,” he said.
“Bitcoin doesn’t come with guarantees of returns or promise … It is a
technology that can be very valuable.”
He said investors had lost
money in the digital currency either way after its collapse in value
since November 2013 from a high of US$1,242 a bitcoin. Yesterday, one
bitcoin was trading for US$221.
“MyCoin slipped under the radar of the bitcoin community because they had other investors in mind,” he added.
Weese
said MyCoin lasted as long as it did due to the nature of the pyramid
scheme’s life cycle, where new investors were recruited by existing
backers.