Ten Percent of All Bitcoin in Circulation Was Just Stolen

MyCoin screenshot via Slideshare

MyCoin screenshot via Slideshare

At least, that’s what it looks like thanks to the sudden collapse of MyCoin, a Hong Kong Bitcoin investment company. Although referred to as an exchange, in reality it marketed (in extremely garbled English and Chinese) the opportunity to invest in Bitcoin mining. The MyCoin altcurrency itself hasn’t been actively traded in some time, after a previous apparent theft and subsequently getting dumped from several other exchanges.

Exchanges do need access to Bitcoin on a huge scale, and either run their own mining operations or make deals with miners to ensure a steady supply to meet demand, but exchanges also…exchange. Bitcoin for dollars. Yuan for Bitcoin. But in this case, investors appear to have exchanged HK dollars for nothing more than the opportunity to be a government witness in the inevitable prosecution, and a plaintiff in the equally inevitable lawsuit. They had been promised returns of up to 300%, despite the fact that Bitcoin’s price has been sliding for a full year.

According to the South China Morning Post, 30 MyCoin investors have come forward telling the same tale: of huge profits promised to investors, of significant money handed to the company, and of a sudden, ghostly silence from their formerly chipper account managers. $386 million was the total funds deposited with MyCoin, according to their own website; the total value of Bitcoin in circulation is approximately $3 billion. Now, their money appears to be gone completely.

“No one seems to know who is behind this,” said a woman surnamed Lau, who saw her HK$1.3 million investment in four bitcoin contracts evaporate. “Everyone says they too are victims … but we were told by those at higher tiers [of the scheme] that we can get our money back if we find more new clients.”

TechInAsia reports that the office was literally boarded up last month, and that the voicemail message is a woman saying something unintelligible, drowned out by loud music. The MyCoin website is a tumbleweed wasteland, with the aforementioned painful Google Translate English and featuring hilariously wrong information like Bitcoin trading at $2 apiece (which was last current several years ago). Heck, if I could buy Bitcoin at $2, I’d throw some money at them myself. It’s trading at just under $220 at the moment.

The online sign-up process to open an account (which no longer works) demands the client’s legal name, government documentation of that identity, cellphone number, and mobile verification code. Needless to say, it’s untraditional in the extreme for Bitcoin exchanges to demand that kind of information, and whoever currently has that missing money also has names, cellphone numbers, and government ID numbers for all of the MyCoin investors. That’s a database a lot of scammers, spammers, and MLM artistes would be very interested in.

Interestingly, a forum post from almost a year ago purportedly by a MyCoin staffer said that they’d suffered a theft, and that one of their employees had run off with some of the exchange’s money.

Do not buy MYC on any Exchange  now!
very very sorry !
one member of the MYC Team cheated us and sold a huge number of MYC on Exchange and then taken away the left MYC ,now he is disappeared,the information of him:
name:胡补刚
Phone number:13368557522
QQ:833821(user name:好样的)2nd QQ:2261920799 (username:遗忘or MYC-领币找我)
we are offer a bounty of catching him and getting back the left MYC!
contact us once you find the little crumb!
sorry again!

Other forum posters asked for details, and were told that every social share of that information would be rewarded…it was never specified how much. “Post again and again ,you will get more and more MYCoins,” the company account said. 104 forum pages and six months later, the consensus among forum users was that only fools would buy MyCoin, the money was long gone, and the website didn’t even work.

Two months ago, MyCoin told clients that the amount they could withdraw from their accounts was capped, unless they managed to wrangle in some new clients (classic Ponzi scheme tactics). They also arbitrarily changed the amount a Bitcoin was worth, setting it at roughly $20 cash out value instead of the $220-230 it was trading for on proper exchanges.

A new and little-understood investment opportunity, positively slathered in buzzwords, marketed to unsophisticated investors without access to dispassionate analysis of the opportunity; arbitrarily-changing valuations; pressure to bring in more investors; flashy presentations and special prizes and bounties; a come-on like a cross between a Vegas casino and a perpetual motion machine. It all appears to add up to one of the splashiest Ponzi schemes on the Altcoin scene.

And there’s some stiff competition for that title.

While we’re waiting for charges to be handed down and arrests to be made, why not enjoy this 40-slide MyCoin presentation via Slideshare?

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Categories: AltCoin, Breaking, Crime, Cryptocurrency, Finance, Fraud, Hong Kong, MyCoin, News

4 replies

  1. Of course, that’s assuming they used the investors’ money to buy Bitcoin instead of hookers and blow in the first place.

    Like

  2. Lel,I love that they call the “thief” a crumb….and tbh ,the kind of ppl that hand over that sort of ID deserve some kind of stupid shit to happen,Stupid gets what Stupid deserves.

    Like

  3. Please understand and know your subject before writing. Unless you are looking for just page views, in that case, great job!

    They never had bitcoin, people gave them money and the crooks claimed they would get back amazing returns. They just put the bizzword bitcoin into the scam. It could have been coffee beans, oil rigs, or anything else for that matter.

    It would have had the same affect as the ponzi goes bust on any of those. No affect since the victims money never went for anything to do with bitcoin. Just like many other ponzi schemes that have gone bust in the last few months and some that are still going.

    Like

    • Hi Steve!

      There is no proof whatsoever that they never had Bitcoin; that is why I didn’t put that in the article.

      It would have been misleading.

      Like I told you on Facebook, they most certainly did have Bitcoin. People were able to cash out and move their Bitcoin as late as November. It’s a company that started as an altcoin marketer, became a Bitcoin investment vehicle, and then crashed. Yes, obviously it was a Ponzi scheme, but it’s a Bitcoin Ponzi scheme. If they’d been an oil company that became an oil hedge fund and turned out to be a Ponzi scheme all along, then this would have been a oil story instead of a Bitcoin story. It’s simply inaccurate to try to say this isn’t a Bitcoin story.

      Like

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