Posted on 02/09/2015 8:26:35 PM PST by CutePuppy
Hong Kong-based bitcoin exchange MyCoin has allegedly shut its doors and stolen HKD 3 billion ($386.9 million) in the process.
The South China Morning Post reported Monday that 30 MyCoin clients approached a local lawmaker with complaints that the company had fled with funds from up to 3,000 investors.
The reports coming out of Hong Kong would seem to indicate that there may have been a Ponzi scheme at play.
"No one seems to know who is behind this," a woman surnamed Lau, who said she lost HKD 1.3 million, told the paper. "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."
One warning sign of a pending collapse could have been that when the company changed its trading rules to bar people from exchanging all of their bitcoins unless they solicited new investors for the firm. ..... < snip >
..... According to the SCMP, MyCoin had hosted events at luxury hotels and a roadshow in Macau in 2014. .....
"If you want it, here it is
Come and get it, but you better hurry
'Cause it may not last
If you want it, any time
Come and get it, but you better hurry
'Cause it's going fast..."
In a recent report, the U.K.-based research firm estimated the value of cryptocurrency transactions would decline to $30 billion in 2015 from over $71 billion last year.
The bearish figures follow a rough start to the year for the controversial digital currency. Prices have been in freefall, trading below $250 throughout January compared with $1,000 at the same time last year, according to CoinDesk, a widely-watched price index.
"The decline is attributable to the combined impact of exchange collapses, Bitcoin theft and regulatory concerns around cryptocurrency's role in funding dark web purchases," Juniper Research said. ..... < snip >
..... "The high-profile Mt. Gox collapse in 2014 highlighted the need for better technology and security controls for bitcoin exchanges, much as the U.S. flash crash highlighted these issues for traditional securities markets," Tepper added. Japanese firm Mt. Gox was a leading bitcoin exchange last year before going bankrupt following the disappearance of 850,000 bitcoins.
As a result of an unregulated marketplace, bitcoin theft has thrived, Juniper Research said, referring to the recent theft of nearly 19,000 bitcoins from U.K exchange Bitstamp, the second largest dollar-bitcoin exchange.
Public perception of bitcoin is closely associated with illegal online purchases and remains a major turnoff for widespread usage. In 2013, the currency came into focus for its prominence on notorious black market website Silk Road. Moreover, reports have emerged that bitcoin may be used by Islamic State militants as part of their fundraising campaigns.
Juniper Research argues that such claims will likely see bitcoin struggle to gain traction beyond a tech-savvy and libertarian demographic.
.....
Cyber money? What could go wrong?
I have unlimited virtual wealth and it multiplies every night. Everytime I open my word processor and I add another zero or two.
I’m going to buy my own Caribbean island.
My thoughts the first time I read about “Bitcoins.”
There is (I think) a need for something like Bitcoin, because I believe there is no freedom without financial privacy. Financial privacy is an essential component to freedom.
But for Bitcoin or any equivalent to go mainstream there is a need for something like the equivalent to escrow or title insurance (in real estate) that verifies the transaction so that people cannot be defrauded with impunity. Obviously it needs to be real time or very nearly real time as well.
The anonymity of the system makes it hard to have any recourse if you open your account and the money is missing.
Where did it go? No one knows. There needs to be some way to verify and insure a transaction without giving up anonymity or the system is never going to be reliable. If your account isn’t safe, then the system has no value. But if you give up anonymity in order to have safety, then the system has no value. In my view... I’m interested in other points of view, though.
I admit I know only the vaguest details of how Bitcoin operates.
DON’T WORRY!
I’ve been assured by Bitcoin enthusiasts on FreeRepublic that the cyber currency is essentially immune to fraud and theft!
They also assured me that, unless I got aboard the bitcoin bandwagon, I would lose my job as an IT executive because I *clearly* didn’t understand technology. (Funny... I’m still employed...)
I guess the only reason Bitcoin is even remotely interesting to people is that banking secrecy has been destroyed in recent years.
Remember Mt. Gaaak!
nobody saw that coming
Bitcoin is subject to extreme counter party risk.
Ping.
But that's exactly the idea behind the blockchain, which is the heart and soul, sine qua non of Bitcoin. It's often described as "brilliant" yet it has many problems of its own (one of which is that it also serves as a "ball and chain") for escrow/verification of transactions. It doesn't do much against theft or accidental loss.
But that's the point - essentially, what you want is the "privacy, safety, convenience/freedom" (a little twist on "good, fast and cheap" trilemma™) - pick two of the three!ul
Juniper Research argues that such claims will likely see bitcoin struggle to gain traction beyond a tech-savvy and libertarian demographic.
...
How about Anarchists? Where Libertarians are found, so too are Anarchists. And since I’m on the subject, how about criminals? Well, I think the article answers that one.
I feel bad for the people who got taken. But seriously, from the first I heard of it every alarm bell in my head was going off. I don’t claim any brilliant foresight, it just seemed really dodgy to me.
I think the article covers criminals and libertarians and assumes that anarchists fall into one or both of these categories?
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