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article image$386m missing as Hong Kong Bitcoin exchange closes

By James Walker     Feb 10, 2015 in Business
Over $386 million has allegedly been stolen by Hong Kong-based Bitcoin exchange MyCoin as it closed down this week, leading to claims that the company is withdrawing funds owed to over 3,000 investors.
Reports emerged from Hong Kong last night that the small, local MyCoin Bitcoin exchange had closed down and taken $386.9 million of investors' funds with it.
Over 3,000 clients had invested around $129,000, worth $1 million in local currency, each. Thirty people who claim to have been affected by the company's demise are appealing to a member of the Legislative Council in Hong Kong and are due to make a statement to the police tomorrow.
MyCoin previously operated a Bitcoin ATM and said it would be listed on the Hong Kong stock exchange. That was several months ago though and since then it has been reported that the company was never a genuine Bitcoin stock exchange.
It appears as though the company may have been designed to take investors' money from the outset, luring customers based upon the attractiveness of Bitcoin.
Customers were encouraged to recruit new customers using promises of cash or cars if they were successful. Receipts were never issued for deposits. The MyCoin website is currently still online but the listed Bitcoin price is very low at under $2 and it appears impossible to create a new account.
The issue is likely to lead to increased scrutiny of the Bitcoin industry in Hong Kong which has previously been left largely to its own devices. KBBEX, another Hong Kong Bitcoin exchange, is offering to perform technical analysis on MyCoin if required and to help MyCoin's customers in order to restore faith in the currency.
Bitcoin generally has been in a period of decline. Its value has fallen dramatically over the past year and exchanges have been closing. It is also increasingly hard to generate new Bitcoins as the algorithms get tougher and tougher as the block chain evolves.
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