Over the course of this past weekend, we have received several reports regarding the Hong-Kong based Mycoin.hk, which apparently closed its doors without warning and ran away with a lot of users’ funds. The reason why this is important is because the Mycoin.hk platform packaged their investment plan so that customers would receive Bitcoin in return for a fiat currency investment. While the scheme itself looks a lot like a ponzi scheme, they did manage to collect a ton of money from unsuspecting investors, and give Bitcoin an even worse reputation at the same time.
Mycoin.hk – Mining Contracts, Bitcoin & Ponzi Scheme Structure
Original sources report that Mycoin.hk has been involved in some sort of mining contract ponzi scheme-esque deal, where users are promised a daily 0.64 Bitcoin payout after they make a massive upfront investment. It has to be said however that there are conflicting reports out there in regards to how much money has officially been stolen by Mycoin.hk.
According to the only somewhat reliable English news source we have found so far, Mycoin.hk left about 3,000 investors in the cold, with a combined loss of HK$3 billion. After doing some quick calculations, CryptoArticles has learned that HK$3 billion roughly translates to over 1.7 million Bitcoin. Do keep in mind that none of the original investments were made in Bitcoin, but only in HK$.
Note from the author : We will keep our ears to the ground in order to find out the exact numbers, and keep this article updated as time progresses.
Hong Kong police officials will receive reports from duped customers this Wednesday, detailing how Mycoin.hk deceived their customers and the company’s pyramid-style Ponzi scheme was packaged as a way to trade Bitcoin. While it might have been obvious from the outset that people investing their money into such a scheme would be duped sooner or later, it doesn’t change the fact that some person or group had clear intention of duping people.
“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;” one of Mycoin.hk’s duped customers told the media on Saturday.
One of the major warning signs of the Mycoin.hk deal being suspicious arose when investors only received a trading account on the website, with no official writing in regards to the investment contract they purchased. Based on this statement, investors may have had the option to invest in HK$ directly, with the promise of receiving a Bitcoin payout once their contract matured.
“We were lured by promises of a HK$1 million return in four months for buying a HK$400,000 bitcoin contract which would produce 90 bitcoins on maturity. Extra profits and prizes such as a Mercedes-Benz car or cash prizes would be paid if an investor found more new clients,” another duped Mycoin.hk investor told CryptoArticles earlier this morning.
Real Estate Agents Selling Mycoin.hk Contracts
But the story became even stranger when we learned that these Bitcoin investment contracts were being actively sold by real estate agents, law firm clerks and even insurance agents. Even though some investors did not agree to sign a contract, people have had accounts opened in their name after receiving a cheque from the victim’s family members.
“I shouldn’t have been greedy. I was told by my real estate agent that the profit would be over HK$2 million after one year, The biggest loss by a single client was said to be HK$50 million, while some mortgaged their properties to invest,” 81-year-old Chan, who was also duped by mycoin.hk, told CryptoArticles.
Luxury Events & Changing Contract Rules
According to several reports, Mycoin held events at several luxury hotels and resorts in 2014, and even went as far as organizing a roadshow in Macau. That shimmer of hope quickly evaporated however, as the company changed its trading rules in December of 2014, not allowing investors to cash in all their Bitcoins unless they found more clients for Mycoin.hk.
To make matters even worse, Mycoin did not pay the correct Bitcoin price, which is currently valued at HK$1,770. In fact, investors were paid out a rate of HK$20 per Bitcoin, which is 1.25% of its actual value. More warning signs started appearing on January 3rd of this year, when so called “renovations” were ongoing at the Mycoin.hk offices.
This recent turn of events associated with Bitcoin will once again spark the discussion on whether or not governments should regulate, or perhaps even ban Bitcoin transactions in their country.