In the wake of recent fraud allegations against a Bitcoin investment company, Hong Kong Central Bank asked people to take extra precautions while investing in speculative investments such as cryptocurrencies.
“Such investments may involve fraud or pyramid schemes,” The Hong Kong Monetary Authority (HKMA) stated in its statement. “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.”
On Monday, Chinese news website SCMP had published a report about a Hong Kong Bitcoin exchange MyCoin that reportedly swept away its investors’ $US387 million (equivalent to $HK3 billion). The report thoroughly noted the prima facie accounts of victims, describing how MyCoin tricked them into investing an average sum of $400,000 by promising attractive returns, but later disappeared into thin air; along with their money.
After getting hit by this “Ponzi” bullet, some of these investors narrated their experience to Leung Yiu-Chung — an assistant to Legislative Council member. The lawmaker further passed this complaint to police and ensured to discuss the matter further with HKMA.
What’s Next in Hong Kong Bitcoin Climate?
Before this unfortunate incidence, Hong Kong was looking like a liberal place to experiment with Bitcoin, especially with the PBOC starting to take strict action against cryptocurrency businesses. Even since, Hong Kong has hosted a series of Bitcoin startups, including debit card provider Cryptex and virtual currency exchange The Asia Nexgen (ANX).
At this hour, it would be difficult to say whether HKMA will push towards proper regularity of Bitcoin businesses in Hong Kong. The warning, though, seems like the tip of the iceberg.