MyCoin closes its doors, $387 million in investor funds vanishes

zdnet.com

Bitcoin exchange MyCoin has closed its doors, potentially leaving up to 3,000 investors out of pocket.

The closure of the Bitcoin exchange was originally reported by the South China Morning Post on Monday. MyCoin, a supposed Hong Kong-based virtual currency trading exchange, has reportedly closed its doors leaving as many as 3,000 local investors with combined losses of HK$3 billion ($387 million).

Approximately 30 MyCoin clients are filing reports with local police that MyCoin was less of a Bitcoin exchange and more like a pyramid-style Ponzi scheme.

MyCoin customers were promised up to HK$1 million as a return on their money in four months for buying a HK$400,000 Bitcoin contract. The contract, which was meant to produce 90 bitcoins on maturity, also encouraged clients to lure others to the fold with new customer recruitment rewards such as extra profit, prizes and cars.

No customer was given written proof of their investment, and in December, MyCoin changed its trading rules -- forbidding clients from withdrawing their virtual currency unless they recruited other customers.

Sounds like more bad news for Bitcoin, it seems more like a pure speculative market and less of a currency.

scmp.com

An 81-year-old woman surnamed Chan said she recovered only HK$1.2 million on her HK$3 million investment on seven bitcoin contracts. “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,” she said. The biggest loss by a single client was said to be HK$50 million, while some mortgaged their properties to invest.

crowdfundinsider

Hong Kong exchange, KBBEX, informed Leung that it would provide assistance to help those affected by the situation in order to regain trust in bitcoin and perhaps perfect technical analysis if required. Victims of MyCoin are set to make a statement to Hong Kong police on Wednesday (February 11th).

Google is showing BTC at just above $222 right now...
Google

Any cryptocurrency experts around that can weigh in on how this will affect things in the long term? Or perhaps since it was more of a ponzi scheme than a real exchange it won't cause a big BTC confidence problem.

Sounds like a few people got nailed real good on this one.

One more company to add to the Naughty List.
I had got taken for 40 bucks in btc investing in a couple HYIP's (High Yield Investment Programs) and have learned that if they promise quick returns on your investment with 100% - 1500% growth, it is most likely a scam.

The investment company was promising to do something involving bitcoin.

Bitcoin itself is just a type of money, like a credit card, a checking account, government fiat paper money, or gold coins.

Since Bitcoin is new, people don't know exactly what its strengths are, and its value will fluctuate by people experimenting with it.

At some time in the future, crypto-currencies will be money, and nothing else. The biggest thing about them is that they don't suffer from loss of value due to inflation. That alone means that they will be worth more paper dollars every year.

a reply to: Semicollegiate

We can bank on that I assume because we have your word on it?

originally posted by: Aliensun
a reply to: Semicollegiate

We can bank on that I assume because we have your word on it?

Having an idea of money and seeing that idea made practical by crypto-currency would give you reason to invest in it.

I wouldn't buy it if I didn't understand what was profitable about it.

Any investment could be ruined by deliberate and/or concerted effort by a cartel or government, like the Weimar Republic inflation or the Roosevelt Gold confiscation.

originally posted by: Elton

Or perhaps since it was more of a ponzi scheme than a real exchange it won't cause a big BTC confidence problem.


Pretty much. Actually it happens, has before and will again due to the nature of what it is. It's unfortunate but with the system be careful with who you trust. Not to say it's not a legit currency, because it can be if one is invested into it right.

Kinda proves a need for a solid real actual currency other than some digits on a computer screen

I think the issue wasn't Bitcoin itself, it was a "supposed" up-and-coming Bitcoin Exchange company that scammed investors, promising a return on their investment in the form of Bitcoins in the future. The same thing could've happened with anything of value - the issue was with this fake company, not the real "cryptocurrency" as people are referring to it as a reply to: hopenotfeariswhatweneed

I found this part interesting

No customer was given written proof of their investment, and in December, MyCoin changed its trading rules -- forbidding clients from withdrawing their virtual currency unless they recruited other customers.

First who would invest heavily with no written proof of their investment?

Secondly , I wonder how common those business tactics are in regards to bitcoin?

That could explain some of the aggressive bloggers online trying to convince others to purchase bitcoin.


I wonder if Black LIght Power uses the same tactics? Probably not, I hear its just around the corner.

My question is this; How does something that never actually existed, vanish?

a reply to: Flatfish

Existentially?

Greed breeds stupidity. What sort of idiot mortgages themselves to the hilt to secure a profit consisting of pixie dust and unwritten promises.

How many times does it have to be said? Virtual currency, that is not regulated, is rife for scams, ripoffs and other tomfoolery.

If you can't hold it, touch it or see it, it can vanish from your possession without you ever knowing.

This is why I just invest in metals. Copper, Lead and Steel are the best investments in case it hits the fan.

originally posted by: Fermy
Greed breeds stupidity.

Oh my, so short, so powerful.

a reply to: FamCore

I see ...thanks for the clarification

First who would invest heavily with no written proof of their investment?

Bernie Madoff sent out written proof 4 times a year.
What more could you want ???

originally posted by: samkent

Bernie Madoff sent out written proof 4 times a year.
What more could you want ???

it's a bit different in that Bernie played on people's inherent greed. Investing in bitcoins is a notch more legitimate than investing in World of Warcraft money.

originally posted by: Crakeur
How many times does it have to be said? Virtual currency, that is not regulated, is rife for scams, ripoffs and other tomfoolery.

If you can't hold it, touch it or see it, it can vanish from your possession without you ever knowing.

Regulation is not a failsafe against insider rip offs. The entire Housing Bubble and Banker Bailout had regulators watching it.

News, like here at ATS, about which currencies have a good record is the best enforcer. Most people in the crypto-currency industry have an incentive to make an honest product. The better its reputation, the more wealth people will be willing to pay for it. Crypto will be inflation proof. The policies of all central banks is to pump out as much "created" money as they can in order to reduce the value of all national debts, through inflation. "Creating" money is called "monetizing the debt". (I'm sure you know that Crakuer, the general reader may not).

The danger with legitimate crypto-currencies is that a big player could bid down the price, because a central bank can "create" an unlimited amount of money.