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Hong Kong lawmakers urge clamp down on bitcoin

Nurdianah Md Nur | Feb. 17, 2015
The move comes after complaints on a recent MyCoin scam that could have cheated investors of up to US$387 million.

The future does not look bright for bitcoin in Hong Kong as local lawmakers are urging the central bank to ban the virtual currency, following the scam that could have duped investors of up to US$387 million.

The company at the centre of the scam, MyCoin, describes itself on its website as the "leading global bitcoin trading platform and application service provider." The company promised its 3,000 customers a return of HK$1 million (US$128,966) each in four months, based on a HK$400,000 investment that would produce 90 bitcoins on maturity, reported the South China Morning Post.

On 6 February 2015, more than 25 clients reported the scam to the local police.  Following the complaints, the Hong Kong Monetary Authority issued a statement on 11 February 2015 urging the public to "exercise extra caution when considering making transactions or investments with bitcoin." However, lawmakers Leung Yiu-chung and James To said that the central bank's move was insufficient and that "the circulation of such virtual currency in the market should be banned," cited Reuters on 11 February 2015.

Bitcoin is a virtual currency that relies on peer-to-peer technology to operate and is not controlled by a central bank. While bitcoin is still very much unregulated in many countries, countries such as Thailand, China, Taiwan and India have banned or are restricting the use of it. The main concern surrounding bitcoin is that it can be used as a means to launder money and finance militant groups since the virtual currency is not regulated by central banks. 

 

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