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    Bitcoin is a decentralized form of digital currency, created and held online all over the world. The cryptocurrency is used to buy things electronically.

    Hundreds of Millions of Dollars Vanish After Bitcoin Exchange Closes

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    Bitcoin exchange MyCoin has closed its doors, locking out more than 3,000 investors and leaving around $387 million in investor funds unaccounted for.

    Bitcoin is a decentralized form of digital currency, created and held online all over the world. The cryptocurrency is used to buy things electronically.

    The Hong Kong-based virtual company filed for bankruptcy one year after the world’s largest Bitcoin exchange, Tokyo-based Mt. Gox, closed without warning. 

    Around 30 MyCoin clients will be filing reports with local authorities, claiming a Ponzi scheme may have been at play, reported the South China Morning Post on Monday.

    A staff member from a travel agency displays a Bitcoin logo as they accept bitcoins for payment in Hong Kong Friday, Feb. 28, 2014, after the world's first bitcoin retail store opened in Hong Kong, despite the virtual currency facing much scrutiny.
    A staff member from a travel agency displays a Bitcoin logo as they accept bitcoins for payment in Hong Kong Friday, Feb. 28, 2014, after the world's first bitcoin retail store opened in Hong Kong, despite the virtual currency facing much scrutiny.
    “No one seems to know who is behind this,” said Ms. Lau, an investor. “Everyone says they too are victims. We were told by those at higher tiers [of the scheme] that we can get our money back if we find more new clients.”

    Customers were given no written document or receipt for their investments, according to Zero Day. They were promised HK$1 million in return for HK $400,000 Bitcoin contract investment within four months.

    Investors were also promised monetary prizes and Mercedes-Benz cars for luring others into the program.

    Last December, MyCoin changed its trading rules, forbidding customers from withdrawing their virtual currency unless they recruited other investors. The office in Tsim Sha Tsui was also closed during that time, due to “renovations.”

    MyCoin has not commented on the allegations.

    The value of Bitcoin has dropped from $1000 per BTC last year to $220.68 per BTC at the time of this writing.

    The Hong Kong Monetary Authority on Tuesday issued a statement warning investors to evaluate all investment schemes carefully, especially Bitcoins, due to their “highly speculative” nature.

    "We would like to remind members of the public to stay vigilant and guard against unscrupulous practices when participating in any investment plan, regardless of whether the products are Bitcoin … or any type of financial or non-financial assets." 

    Tags:
    Mt. Gox, MyCoin, Ms. Lau, Tokyo, Hong Kong
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