CEO absconds as another cryptocurrency firm implodes in Vietnam

Investors and board members of the Ho Chi Minh City-based Sky Mining have not been able to reach Le Minh Tam, its CEO, since Monday.

Investors seeking the company's main office in Phu Nhuan District found the building closed and the company nameplate removed.

They also found that all 600 mining machines in the company's factory in the neighboring Dong Nai Province's Bien Hoa Town had been taken away by a group of people claiming to be maintenance workers.

They suspected that Tam had run away with $35 million from investors.

‘We are victims, too’

The deputy chairman of the company, Le Minh Hieu, said that he has formed a temporary board of 16 people to support investors and calculate the remaining asset of the company.

Hieu said that Tam has gone to the U.S., taking all the money of the company and its investors. He said he was not clear about the details of the company’s assets as Tam had directly managed the mining rigs and storage.

“[The board] has reported this to the police and showed evidence that we are not guilty,” said Hieu, who said many investors have threatened to hurt his family.

“We are victims too,” he told VnExpress.

A group of 20 investors have filed a petition on the alleged fraud with the police of Ward 9 in Phu Nhuan District, where Sky Mining was located.

Sky Mining organized several events to attract investors. Screenshot taken from Sky Mining's video on Youtube

‘Largest’ in Vietnam

On its website, Sky Mining claimed to specialize in purchasing computers to solve algorithms, a process known as cryptocurrency mining.

It invited investors to buy a computer system that performs the necessary computations for mining, known as the mining rig.

Investors need to pay $100 to $5,000 for each of these rigs, which will be kept at Sky Mining’s 26 storage spots all over the country for mining.

Sky Mining promises that after 12 months, investors would earn back all their initial investment in addition to a profit of up to 300 percent. Investors will have to return the mining machines to Sky Mining after that period.

Active since March, the company has acquired 7,000 mining rigs, investors said.

It also promised to pay commission to investors who invite more people to join the company.

The company hosted numerous events to attract investors in Hanoi and HCMC, where leaders of Sky Mining claimed that it was the “largest” cryptocurrency mining company in Vietnam.

‘Last resort’

After two days of hiding, Sky Mining CEO Tam published a note on a Facebook group for investors on Wednesday, apologizing for the “everything.”

Tam said that the market was unpredictable, mining rig value had dropped drastically and profitability had fallen.

“My last resort is to stay hidden from public to protect my life,” he said.

He also told investors to go to the company to recover the capital they have invested, and that after all the work is done, he would declare bankruptcy.

But when investors reached the office, it was empty.

Same story

The Sky Mining fraud is similar to that of another tech company in Ho Chi Minh City’s District 1 that was stormed by investors demanding refunds in April.

The investors said that the IT firm, Modern Tech, had cheated them of VND15 trillion ($650 million) with a cryptocurrency ponzi scheme.

The modus operandi was similar to other scams. The company guaranteed that the lowest interest investors would receive was 48 percent per month, with a payback period of less than four months.

The alleged $650 million loss is 150 times larger than Modern Tech’s initial equity of $4.4 million invested by a group of only eight people who founded the company in October 2017.

Modern Tech representatives until now have not responded to the accusations, and its founders have remained incommunicado.

Vietnam imported a total of 6,400 cryptocurrency mining systems in the first four months of the year, according to official data.

The country has constantly been in the top five countries with the highest traffic to the Bitcoin trading platform and Bitcoin news site, CryptoCompare data shows.

Despite proposals to legalize Bitcoin and other cryptocurrencies, authorities have asserted that they are not legitimate in Vietnam.