Statement on Recent Fraud Cases
Bitcoin is a very young technology with potentially large implications on how we transact value, understand money and digital property. As such it takes time to understand on a technologically, financially or legal matter.
It is important to note that bitcoin comes with no profit promises or warranty. There is no central entity that backs or controls the Bitcoin network or protocol.
This concept is entirely new in the world of finance. Fraudulent companies have used the confusion around what Bitcoin does and who controls it to give the impression that they are representing this innovation. They have misinformed and tricked clients into thinking they invest their money into Bitcoin when in reality they aren’t. They promised high returns for loans and investments far above what would be possible on the open markets. Such scams have unfortunately always been common, sometimes even disguising as ant farming (2007, one million victims, 1.2 billion USD lost). Most often these schemes occur in the otherwise tightly regulated financial industry, where they are successfully vetted and registered with the authorities before turning out as a Ponzi scheme. Bernie Madoff’s fund had outstanding debt of 64.8 billion USD in debt when it went out of “business”, a classical Ponzi scheme despite being approved by the SEC.
It can be difficult to spot a well-run Ponzi scheme before it collapses, but anybody should at all times approach potential investments with at least two critical eyes. Unusual high returns and lack of receipts should always ring alarm bells. We condemn any kind of fraud, no matter if carried out in the name of Bitcoin or any other technology, innovation or business. We call for the Hong Kong police to conduct their investigations as thoroughly as possible and bring those responsible to court.
One great characteristic of Bitcoin is that you do not need to put your trust into a third party to hold your coins. You can keep them on your computer, on a piece of paper or in your brain. You can verify your ownership over the bitcoins using the publicly available blockchain ledger. Unless you own the private key to your bitcoin, you do not own them in a technological sense, but merely put them into someone else’s hands. It is important to carefully vet any organisation that holds bitcoins on your behalf, be it an online wallet, a mining pool or an exchange.
The Bitcoin Association of Hong Kong is a community organisation that aims to educate the public about Bitcoin and related technologies. It aims at being a trusted resource for everyone who wants to learn or get engaged in the quickly growing ecosystem of Bitcoin related businesses and individuals in Hong Kong.
We are committed to helping any investigation against companies that use bitcoin as a tool or buzzword to defraud or otherwise harm people.
If you have any questions about Bitcoin, please ask anytime: [email protected]