Thursday, April 24, 2014   




Bitcoin punters take big hit

Imogene Wong

Monday, November 11, 2013

A local firm operating a bitcoin trading platform for mainlanders was shut suddenly last week, with investors losing up to 25 million yuan (HK$31.8 million).

GBL, a local firm which set up the trading platform for bitcoin in June, attracted nearly 1,000 mainland investors. However, many users held off from trading in September as the bitcoin price kept surging and the firm suffered from a lack of cash flow.

Its sudden closure on October 26 led to the disappearance of all its staff as well as the investors' 25 million yuan.

Some mainlanders went to the IFC office listed on its website, but this turned out to be a false address.

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Fourteen of them made a report to the Hong Kong police.

Bitcoin is a virtual currency invented in Japan in 2008. It is generated by a software program and not regulated by any government or central bank.

Its value relies on participants' mutual recognition. It may be traded for real money but the exchange rate is volatile. For example, its value against the yuan jumped nearly 70 percent to 2,143 yuan per bitcoin in the past week, according to charts. Earlier this year, it was traded at 82 yuan.

Lately it has been accepted by a number of online vendors as a method of payment. The world's first bitcoin ATM was set up in Canada last month.

The local platform, BitCashOut, launched in June, said the daily transaction amount is around HK$10 million. Mainland platforms have the largest trading volume in the world with up to 1.1 billion yuan being traded daily.

But the Hong Kong Monetary Authority warns that the SAR, like many other places, has currently no regulations relating to virtual currencies. This kind of currency does not have any real financial support and leads to low transparency and volatile prices.

A US Senate panel will meet on November 18 to explore risks related to virtual currency.


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