Hong Kong Central Bank Warns Against Bitcoin Following Alleged Scam

Members of the public should exercise extra caution when considering an investment in bitcoin because of the digital currency’s “highly speculative” nature, Hong Kong’s central bank has said.

The Hong Kong Monetary Authority issued a statement in the wake of reports that a bitcoin exchange and investment scheme called MyCoin had disappeared with an estimated $386.9m of customers’ funds.

The public should evaluate all investment schemes carefully, regardless of whether they involve bitcoin, the central bank said.

The statement read:

“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.”

The HKMA reiterated its guidance around digital currencies like bitcoin issued in two circulars last year, saying it expected banks to be extra vigilant in dealings with clients who operate digital currency-related businesses, and that banks should pay extra attention to client controls against money laundering and terrorist financing.

The special administrative region’s central bank said it defined bitcoin as a “virtual commodity” that does not qualify as a means of payment or electronic money. The bank added that it does not regulate bitcoin.

The figure of $386.9m allegedly stolen by MyCoin was first reported by Hong Kong daily the South China Morning Post. The SCMP said it derived the figure from the exchange’s earlier claim that it had 3,000 clients in Hong Kong who each invested an average of $130,000.

Legislative Council member Leung Yiu-Chung has helped publicise the concerns of some 30 MyCoin customers who have been unable to obtain their funds from the investment scheme.