MyCoin Ponzi Scheme: $387 Million Reportedly Missing

Bitcoin

A suspected MyCoin ponzi scheme has investors concerned, as $387 million appears to be missing. According to reports, 3,000 clients invested an average of $129,000 in the questionable company. In return, they were promised lucrative bitcoin contracts. Less than one year later, MyCoin’s office is closed.

MyCoin is suspected of running a ponzi scheme, as investors were expected to help the company find new clients. Initially, investors were offered rewards for their recruiting efforts, including cash prizes and luxury vehicles. Later, they were prohibited from cashing out their investment unless they brought in new clients.

Ponzi and pyramid schemes are dependent on the generation of new clients. Essentially, funds received from clients are never invested. Instead, they are used to pay investors who are higher on the tier. The schemes often fail when a high volume of clients attempt to cash out their investments.

On January 3, the company’s front door was “blocked with a wooden plank.” A written notice, which was posted on the window, stated that the office is closed for renovation.

Numerous investors have complained, as their money appears to have vanished. As reported by South China Morning Post, records indicate the company’s assets were transferred to a company based in the British Virgin Islands.

According to reports, William Dennis Atwood was listed as MyCoin’s director when the incident occurred. The assets were transferred to the Virgin Islands upon Atwood’s resignation in November 2014. Wong Lok-yan reportedly replaced Atwood following his resignation.

As reported by CNBC, 30 victims of the MyCoin ponzi scheme lodged complaints with a local lawmaker. Unfortunately, they never received written documentation of their investment.

One client, surnamed Lau, said she lost an estimated $168,000.

“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 pyramid scheme] that we can get our money back if we find more new clients.”

Chinese University lecturer Simon Lee Siu-po said the incident underlines a need for regulations on digital currency.

“The regulatory framework has failed to catch up with the times… Electronic tellers for bitcoin have emerged… It has actually become an online currency… Even if their servers are located abroad, monitoring is still possible under our laws.”

As there is little proof that the MyCoin ponzi scheme occurred, the investors may not have any recourse. However, the incident could force lawmakers to impose regulations on virtual currency.

[Image via Getty Images North America]