NEW YORK (InsideBitcoins) – It what appears to be a classic Ponzi scheme, Hong Kong-based bitcoin exchange MyCoin has shut down, on the heels of a major promotional push to garner more investors. The company promised lavish incentives, including cash bonuses and a Mercedes-Benz automobile to attract new money to the exchange. Instead, investors may be out as much as $387 million dollars.
The South China Morning Post is reporting the closure, impacting as many as 3,000 investors.
“No one seems to know who is behind this,” a woman surnamed Lau told the Post. She claims to have lost HK$1.3 million in four bitcoin contracts. “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.”
The biggest loss among victims of the fraud was reported to be HK$50 million, nearly $6.5 million USD. Others had mortgaged property to invest in contracts with the exchange.
In December, the company wouldn’t allow withdrawals from the exchange unless a customer brought in new clients. Bitcoin redemptions were also valued well below market prices. The offices of MyCoin.hk had been boarded up since early January, with a notice that the facility was undergoing “renovations.”