Hong Kong based Bitcoin service MyCoin has terminated operations with HK$3 Billion ($386.9 m) in investor funds. According to reports from Hong Kong the company had earlier claimed a client base of 3,000 who had invested HK$1m each which points towards huge losses.

Fraud is suspected as many victims are now coming up with statements. One local woman was quoted as saying: “We were told by those at higher tiers [of the scheme] that we can get our money back if we find more new clients.” The issue came to light on Friday when about 30 people claiming to be victims of the company’s actions petitioned a local member of the Legislative Council, Leung Yiu-chung. The victims are reportedly due to make a statement to Hong Kong police on Wednesday.

MyCoin offered clients to invest in a contract that would provide a HK$1 million return (£84,823) on a HK$400,000 (£33,929) investment, and even, as the South China Morning Post says, offered additional prizes of Mercedes-Benz cars or cash if investors recruited others.

“No one seems to know who is behind this,” said a woman surnamed Lau, who saw her HK$1.3 million investment in four Bitcoin contracts evaporate. “Everyone says they too are victims … but we were told by those at higher tiers [of the scheme] that we can get our money back if we find more new clients.”

An 81-year-old woman surnamed Chan said she recovered only HK$1.2 million on her HK$3 million investment on seven Bitcoin contracts. “I shouldn’t have been greedy. I was told by my real estate agent that the profit would be over HK$2 million after one year,” she said. The biggest loss by a single client was said to be HK$50 million, while some mortgaged their properties to invest.

Last month, the company posted a notice at its office in Tsim Sha Tsui saying it would be closed for renovation from January 3. The front door has been blocked by a wooden plank.

“We are a bit worried that police will refuse to handle the cases because there were no written records,” said Leung, who plans to seek a meeting with the Monetary Authority to demand regulation of Bitcoin trading.

Simon Lee Siu-po, a senior lecturer at Chinese University’s business school, said the government should make laws to monitor virtual currencies.

“The regulatory framework has failed to catch up with times,” he told RTHK on Monday. “Electronic tellers for Bitcoin have emerged … It has actually become an online currency.”

Increasing number of fraud related cases are jeopardising the reputation of Bitcoin all over the world. Amongst other cases was the Mt. Gox, which lost 650,000 BTC in client deposits ($137 million at today’s prices) and additional fiat cash, leading to its bankruptcy. More recently, Slovenia’s BitStamp was hacked to the tune of more than 19,000 BTC ($4 million) in early January. This isn’t even the first such fraud to affect the Hong Kong market, as the operators of the GBL exchange disappeared with $4.1 million in client funds in November 2013, after just six months in business.

This event could possibly lead to more regulation of cryptocurrency in Hong Kong, which has so far operated with little scrutiny. Councilor Leung has said he wants to meet with Hong Kong’s Monetary Authority to discuss better protections for Bitcoin investors.

(image credit: BTC Keychain)