MyCoin Ponzi Scheme Another Setback For Cryptocurrencies

With the negative press from the Mt. Gox exchange failure finally beginning to subside, bitcoin looked poised for a revival as CoinBase’s new regulated exchange began to improve confidence in the cryptocurrency.

However, bitcoin suffered yet another setback on Tuesday as reported that Hong Kong’s MyCoin exchange shut down unexpectedly, stealing around $386.9 million from investors. 

MyCoin A Ponzi Scheme

Around 3,000 investors were affected by the exchange’s closure and upon further investigation, officials believe the site was operating as a Ponzi scheme.

In December, the company’s terms of service shifted to prevent customers from withdrawing their investments and offer rewards in exchange for soliciting new investors.

Fraud At Play

Bitcoin enthusiasts say the issue is unrelated to the reliability of the currency and instead demonstrates an example of simple fraud.

However, the incident is likely to create another wave of skepticism from the general public.

Related Link: Coinbase Attack Takes Shine Off Exchange Enthusiasm

Issues Could Create New Regulations

Some are expecting the MyCoin scandal to prompt Hong Kong to introduce some regulations for the use of cryptocurrencies; but so far the Hong Kong Monetary Authority has only warned the public against investing in virtual currencies.

The bank issued a statement on Monday afternoon following reports of MyCoin’s closure saying that people interested in investing in the currency are urged to be cautious due to the currency’s “highly speculative nature."