HK lawmakers urge ban on bitcoin

Published Wed, Feb 11, 2015 · 10:57 AM

[HONG KONG] Hong Kong lawmakers on Wednesday urged authorities to ban bitcoin as more than 25 people flocked to police headquarters to complain over a scam involving the digital currency that media estimate could have duped investors of up to US$387 million.

The government should clamp down on bitcoin, said lawmakers Leung Yiu-chung and James To, who accompanied the complainants, among them Nepalese and mainland Chinese, as well as Hong Kong citizens. "The government should not just stand aside," Mr Leung told reporters. "It's simply not enough to just ask people to exercise caution when investing ... it has to ban the circulation of such virtual currency in the market." His comments came in the wake of a statement by the Hong Kong Monetary Authority urging people "to exercise extra caution when considering making transactions or investments with Bitcoin".

The company at the centre of the scam, MyCoin, describes itself on its website as a "leading global Bitcoin trading platform and application service provider".

Telephone calls to MyCoin in Hong Kong could not be connected on Wednesday. Calls to its China customer service line were not answered.

MyCoin promised clients a return of HK$1 million (US$128,966) over a 4-month period, based on a HK$400,000 investment that would produce 90 bitcoins on maturity, the South China Morning Post reported on Monday.

It claimed to have 3,000 customers investing an average of HK$1 million each, the paper said.

Investors said they had been lured to the scheme by real estate brokers, insurance agents, and legal clerks. "Clients seem not to be the young, savvy bitcoin crowd, but older, less savvy investors," said Leonhard Weese, president of the Bitcoin Association of Hong Kong, whose help has been sought by victims. "Many are embarrassed." A police official declined to say how many complaints had been made, but said a statement would be issued.

Bitcoins are created through a "mining" process that uses a computer's resources to perform millions of calculations.

Advocates say the virtual currency is revolutionary as it is not controlled by a central bank.

But the rising popularity of bitcoin, unregulated in many places including Hong Kong, has stoked concern it can be used as a vehicle to launder money and finance militant groups.

A middle-aged woman, who identified herself as Grace, said she had re-mortgaged her apartment to invest HK$ 1.6 million with MyCoin to realise her dream of setting up her own company. "Now I don't even dare tell my husband." she said.



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