Fri, Nov 15, 2013 - Page 15 News List

Chinese Bitcoin site defrauds investors

AFP, SHANGHAI

An online Bitcoin trading platform aimed at Chinese investors has suddenly closed, leaving hundreds with more than 20 million yuan (US$3.3 million) in combined losses, a newspaper said yesterday.

Hong Kong-registered Global Bond Ltd shut down late last month and disappeared before users could withdraw investments from their accounts, the China Business News said.

Bitcoins — a form of digitally created “e-money” — are stored in a virtual wallet and can be sent directly to another person, bypassing banks.

They were created in 2009 in the wake of the global financial crisis by an anonymous programmer who wanted a currency independent of any central bank or financial institution. Their value has soared in recent months, so much so that a Norwegian man who bought US$24 worth of them soon after they were invented found his stash valued at US$690,000 earlier this year.

The design of Global Bond’s platform, which operated like a futures trading exchange, led users to believe they could make profits, attracting them to deposit more funds, the China Business News said.

It estimated that about 500 people were affected, and some of them had informed police in Shanghai and nearby Kunshan.

China’s central bank is wary of virtual currencies, raising the alarm in 2007 over their potential use in online gambling and money laundering. The government has banned the trading of virtual currencies in online games to prevent potential risk to economic and financial order.

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