From CNET: As Bitcoin experiences global growth and more widespread adoption in peer-to-peer payment circles, one Asian Bitcoin trading company has swiftly closed its doors, leaving investors facing massive losses.
South China Morning Post reported the closure of Hong Kong-based MyCoin, which is believed to have left as many as 3,000 investors facing a total of HK$3 billion ($387 million) in losses.
But while Bitcoin has been hit with its share of issues in the past -- including the bankruptcy of the major Japanese Bitcoin exchange Mt. Gox -- this latest problem appears to be less to do with the vagaries and fluctuations of the world's most famous cryptocurrency and more due to classic financial fraud.
MyCoin clients were promised massive returns on initial investments -- as much as HK$3 million on a $2 million investment, which bought 7 "Bitcoin contracts". However, the company reportedly changed its terms of service last December, preventing customers from withdrawing their funds. In addition, clients were offered rewards for recruiting new customers to invest in the company -- behaviour consistent with the operation of a pyramid scheme.
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