MyCoin Exchange Bankruptcy

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The operation of a bitcoin ATM and efforts made to list on a stock exchange gave legitimacy to the exchange operation. While we can look back and see this as a Ponzi scheme, the key issues at the time include a lack of knowing who’s behind the operation, lack of any sort of registration, and no visibility into the financial status of the exchange. An environment where these are not standard practice can enable such schemes to flourish.

About MyCoin

Hong Kong Bitcoin exchange MyCoin

promising attractive returns

Mycoin had promised a 150 percent yield to investors. Even high-end investors fell for the scam, as one of the aforementioned events took place in the grand ballroom of the Sheraton Macao Hotel in August of 2014.

Website: mycoin.hk.

https://web.archive.org/web/20140801000000*/mycoin.hk

The Reality

This sections is included if a case involved deception or information that was unknown at the time. Examples include:

• When the service was actually started (if different than the "official story").
• Who actually ran a service and their own personal history.
• How the service was structured behind the scenes. (For example, there was no "trading bot".)
• Details of what audits reported and how vulnerabilities were missed during auditing.

What Happened

The MyCoin platform collapsed with an estimated $387m USD funds.

Key Event Timeline - MyCoin Exchange Bankruptcy

Date	Event	Description
February 9th, 2015	Date Of Event	The reported date of the event. TBD: Need to locate article from South China Morning Post.
February 9th, 2015 6:03:06 AM MST	NewsBTC Article Published	NewsBTC reports that Hong Kong-based Bitcoin exchange MyCoin.hk has reportedly gone bankrupt, leading to the loss of $390 million worth of investors' funds. Approximately 3,000 MyCoin customers were promised double returns within a year, revealing a pyramid-structured Ponzi scheme. Victims, such as Lau, were coerced by higher tiers of the scheme to bring in more customers to retrieve their funds. Investors were asked to invest around $400,000 in a Bitcoin bond with promises of a HK$1 million return in four months and additional Bitcoin upon maturity. MyCoin organized events at luxury hotels to project legitimacy. After the scheme collapsed, deceived customers sought legal help from lawmaker Leung Yiu-chung and plan to submit statements to the Hong Kong police. Councilor Leung is set to discuss investor protection with Hong Kong's Monetary Authority.
February 10th, 2015 5:47:49 AM MST	NewsBTC Article Published	NewsBTC reports that, in response to recent fraud allegations against a Bitcoin investment company, the Hong Kong Central Bank, through the Hong Kong Monetary Authority (HKMA), issued a warning advising people to exercise caution when dealing with speculative investments like cryptocurrencies. The HKMA emphasized the potential for fraud or pyramid schemes associated with such investments, particularly given the highly speculative nature of Bitcoin. The cautionary statement followed a report about MyCoin, a Hong Kong Bitcoin exchange, allegedly defrauding investors of $US387 million. Some victims shared their experiences with a Legislative Council member, prompting further investigation by the police and discussions with HKMA. The incident raised questions about the future regulatory approach to Bitcoin businesses in Hong Kong, which had previously been considered a liberal environment for cryptocurrency experimentation.
August 20th, 2025	Operator Arrest	On August 20, 2015, Taiwanese police arrested Lu Kuan-wei and Chen Yun-fei, the alleged masterminds behind the MyCoin Bitcoin exchange Ponzi scheme, for scamming investors out of $30.6 million USD. TBD - Read
August 28th, 2015 7:00:29 AM MDT	Bitcoinist Arrest Article	Bitcoinist reports on the arrest. The arrests followed complaints received by the Criminal Investigation Bureau in Taipei. MyCoin, posing as a Bitcoin exchange, lured investors with promises of oversized returns, resulting in losses across various Asian countries. The scheme involved events convincing investors to spend $49,600 USD for 90 bitcoins and an account with MyCoin's parent company, pledging daily returns for a total value of $337 USD. MyCoin's promise of a 150 percent yield attracted professionals and drew in around 3,000 people. After its shutdown in February 2015, the Hong Kong Monetary Authority warned against similar Ponzi schemes, emphasizing vigilance in investment activities. The arrests of the key suspects may provide relief and justice to the victims of the scam.

Technical Details

This section includes specific detailed technical analysis of any security breaches which happened. What specific software vulnerabilities contributed to the problem and how were they exploited?

Total Amount Lost

Provider	Estimate	Notes
Comparitech	386,900,000
Kyle Gibson	8,000,000.00	Description says $387m.

The total amount lost has been estimated at $387,000,000 USD.

How much was lost and how was it calculated? If there are conflicting reports, which are accurate and where does the discrepancy lie?

Immediate Reactions

How did the various parties involved (firm, platform, management, and/or affected individual(s)) deal with the events? Were services shut down? Were announcements made? Were groups formed?

"On Monday, Chinese news website SCMP had published a report about a Hong Kong Bitcoin exchange MyCoin that reportedly swept away its investors’ $US387 million (equivalent to $HK3 billion). The report thoroughly noted the prima facie accounts of victims, describing how MyCoin tricked them into investing an average sum of $400,000 by promising attractive returns, but later disappeared into thin air; along with their money."

Ultimate Outcome

What was the end result? Was any investigation done? Were any individuals prosecuted? Was there a lawsuit? Was any tracing done?

The incident was included in Kyle Gibson's list, BitcoinExchangeGuide, and Comparitech.

Total Amount Recovered

There do not appear to have been any funds recovered in this case.

What funds were recovered? What funds were reimbursed for those affected users?

Ongoing Developments

What parts of this case are still remaining to be concluded?

Individual Prevention Policies

No specific policies for individual prevention have yet been identified in this case.

For the full list of how to protect your funds as an individual, check our Prevention Policies for Individuals guide.

Platform Prevention Policies

Policies for platforms to take to prevent this situation have not yet been selected in this case.

For the full list of how to protect your funds as a financial service, check our Prevention Policies for Platforms guide.

Regulatory Prevention Policies

No specific regulatory policies have yet been identified in this case.

For the full list of regulatory policies that can prevent loss, check our Prevention Policies for Regulators guide.