UPDATED 03:06 EST / AUGUST 25 2015


Bitcoin fraud: police arrest two promoters of the MyCoin scam in Taiwan

Two people connected to defunct Hong Kong-based Bitcoin marketplace MyCoin are reported to have been arrested August 20 in Taiwan.

According to a report from Want China Times47-year-old Chen Yun-fei and 39-year-old Lu Kuan-wei were arrested by the Criminal Investigation Bureau in Taipei on fraud related charges; the report notes that “many cases” of fraud has been reported by Taiwanese victims of Hong Kong-based Bitcoin trading platform.

Chen and Lu are alleged to have held several MyCoin events where they persuaded people to spend NT$1.62 million ($49,600) for 90 bitcoins and an account with MyCoin’s parent company, which would then distribute 0.63 of a bitcoin every day for a total value of NT$11,000 ($337).

Identical to the way the MyCoin scam operated in Hong Kong, investors were told that their investment would be returned to them after just four and a half months.

One victim in Taiwan is reported to have spent over NT$14 million ($428,700) on the scam, with the police estimating that the combined amount that Taiwanese investors lost exceeds NT$600 million ($18.3 million).

The MyCoin Bitcoin scam was originally exposed in February when the company, operating essentially as a pyramid scheme, collapsed; a figure used at the time claimed that MyCoin may have taken as much as $387 million in customer money, although later estimates use a lower figure.

Hong Kong police subsequently arrested five promoters of the scam in March, but had not yet tracked down those behind it, with reports at the time noting that police were still searching for a number of other people in connection with the case that included former and current directors and shareholders of the investment company involved.

To this day the whole scam remains somewhat of a mystery when it comes to the involvement of Bitcoin; while MyCoin presented itself as a multi-faceted Bitcoin company, there remains a lack of evidence that the company ever held as much as 1 Bitcoin, suggesting that it was nothing more than a HYIP/ponzi scam that was using Bitcoin by name only.

It’s not clear from the report when the pair arrested will face court, or whether police are continung to pursue an investigation into others involved in the scam.

Image credit: Duncan Riley

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