Bitcoin platform claims thousands of victims in Hong Kong

A trading platform of virtual currency Bitcoin in Hong Kong that took in an estimated HK$3 billion from thousands of investors has reportedly gone bust. Legislative Council member Leung Yiu-chung said about 30 clients of mycoin.hk, have told him that they have been unable to contact the people in charge of the company which has closed its doors since last December.

Leung estimated that more than 3,000 Hong Kong people have invested a total of about HK$3 billion in Bitcoins issued by mycoin.hk.

An investor, surnamed Lau, said a law firm employee persuaded her to buy Bitcoins at mycoin.hk last September. She alleged that the person collected a HK$1.3-million cheque from her to set up an account at mycoin.hk without her consent. No document was signed in the process, she said.

Each of the company's Bitcion has depreciated to less than HK$20 since last December and withdrawal instructions by customers were ignored. The market value of a Bitcoin, as provided by preev.com, was about HK$1,760 on Sunday.

Another 81-year-old investor, surnamed Chan, told media that she had invested HK$3 million in buying Bitcoin on the platform, hoping to make a profit of HK$5 million a year later. But she could only recover HK$1.8 million so far.

Leung said the platform apparently lured investors with rebates and dividends to introduced friends and relatives to buy Bitcoin.

The investors suspected that they were the victims of an illegal pyramid scheme. A group of investors had said that they would report the case to the police this Wednesday. A police spokesperson said they would keep a close eye on the development.

Bitcoin is an online payment system without backing from a central bank or any government. Bitcoins are generated from a computing process called mining. It was first introduced in 2009 and first came to Hong Kong in February last year. As its value is determined by agreements of users, Bitcoin's undulation is severer than normal currencies. Authorities in Hong Kong have long warned that Bitcoin was a product subject to high risk. Hong Kong has no law to regulate virtual currencies like Bitcorn. The once biggest Bitcoin trader, Mt. Gox headquartered in Tokyo, went bust early last year. The value of Bitcoin dropped more than 50 per cent last year.