Hong Kong-based bitcoin exchange MyCoin has stopped trading in the internet with as much as HKD3bn ($387m) of investors’ funds unaccounted for.
The sudden closure of MyCoin follows a recruitment drive pushed by the firm for investors that promised prizes like a Mercedes-Benz car if investors found new clients.
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MyCoin has reportedly changed its trading rules preventing people from exchanging all of their bitcoins unless they recruited new people to invest in the exchange.
The exchange has promised customers returns of HKD1m ($128,976) over a four-month period based on a HKD400,000 ($51,587) investment that would produce 90 bitcoins on maturity and pressurized them into buying bitcoin-based contracts by real estate agents, insurance agents and law firm clerks.
According to a report by the South China Morning Post, clients of the exchange have approached a local lawmaker alleging about the company’s absconding with their money.
The Hong Kong Monetary Authority (HKMA) said in a statement: "The case may involve fraud or pyramid schemes. Given the highly speculative nature of Bitcoin, we have all along urged the public to exercise extra caution when considering making transactions or investments with Bitcoin."
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By GlobalData
