Hong Kong-based Bitcoin marketplace MyCoin is reported to have collapsed after taking $387 million in customer money, in what appears to be yet another HYIP scam.

The company offered an eclectic mix of services, saying on its about page that it “provide user [sic] with integrated Bitcoin online entertainment services as a strategic objective to focus on value-added services Bitcoin, mobile e-commerce and internet leisure games for Bitcoin user online entertainment services.”

We’re not sure exactly that that’s supposed to mean either, but among its fairly typical Bitcoin exchange service the company offered Bitcoin mining, and here’s where it gets interesting.

According to reports by the South China Morning Post investors were “lured by promises” of a HK$1 million ($129,000 return) in four months after buying a HK$400,000 ($51,600) Bitcoin contract which would produce 90 Bitcoin on maturity through the Bitcoin mining arm.

Pyramid scam

Besides the promise of impossible returns, investors were also incentivized to sign up other investors to the scam with rewards of cars, cash and more. MyCoin also attended a number of investment expos touting its wares, complete with flash cars and glamor girls in an attempt to bring in more investors.

There’s also some suggestion that real estate agents, law firm clerks or insurance agents were near the top of the pyramid and pressured people into investing, with several investors even saying they never gave approval to sign up to the scam, but were instead signed up without permission.

No records

Even more dubious is that investors were never given paperwork to confirm their investments and expected rate of return, which may cause problems with any future police investigation.

“We are a bit worried that police will refuse to handle the cases because there were no written records,” said one investor who is planning to seek a meeting with the Hong Kong Government to demand regulation of Bitcoin trading.

At the time of writing the MyCoin website remained operational, but there are reports that their physical office in Hong Kong has closed down.

photo credit: The money is better on the top layers… via photopin (license)