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Thousands duped by cryptocurrency scams in Vietnam in 2018

By Dy Tung   December 25, 2018 | 07:43 pm PT
Thousands duped by cryptocurrency scams in Vietnam in 2018
A token of the virtual currency Bitcoin is seen placed on a monitor that displays binary digits in this illustration picture, December 8, 2017. Photo by Reuters/Dado Ruvic
Tens of thousands of Vietnamese people lost their money this year to cryptocurrency scams that grew in sophistication and scale.

In early April, dozens of disgruntled investors gathered in front of Ho Chi Minh City-based startup Modern Tech’s headquarters in HCMC, carrying signs accusing the company of duping them of an estimated VND15 trillion ($645.47 million). The company had enticed them to invest in its cryptocurrencies, including iFan and Pincoin.

According to investors, Modern Tech guaranteed a profit of 48 percent a month, with a maximum payback period of 4 months. Successful referrals rewarded an additional 8 percent of the amount deposited by the new member.

To build trust, iFan and Pincoin were billed as international cryptocurrencies originating in Singapore and India. Modern Tech introduced iFan as a virtual currency used for showbiz related services.

However, just four months after it was introduced, iFan collapsed, leaving no international transaction value. Investors were left with portfolios supposedly worth VND15 trillion, but with no way to withdraw the money. Around 32,000 people were estimated to have been duped.

In July, HCMC-based Sky Mining, a self-proclaimed largest cryptocurrency mining firm in Vietnam, was the next company to be accused of fraud.

On July 23, many investors found they were no longer able to contact the firm’s CEO, Le Minh Tam. They also visited the company’s premises to discover that the firm's mining rigs had been completely cleared of computers.

Active since March this year, Sky Mining had acquired 7,000 mining rigs, which are computer systems that perform necessary computations for cryptocurrency mining.

Investors were asked to pay $100-$5,000 for each of these rigs, which were to be kept at Sky Mining’s 26 storage spots scattered all over the country. Sky Mining promised that after 12 months, investors would earn back all their initial investment and make profits of up to 300 percent.

After Tam’s disappearance, many investors found Sky Mining was scam, with some having paid up to VND10 billion ($430,390) to get 0.6 percent daily interest. Tam then released a video on social media, claiming he was away getting medical treatment and promising to resolve all issues.

Over 800 people have petitioned for the man’s extradition from the U.S., where he is believed to be residing.

Also in July, the Investigation Department of the Ministry of Public Security prosecuted and detained several men involved in a pyramid-scheme that scammed over 6,000 investors on the VNCOINS cryptocurrency exchange.

Originally, the company fabricated a virtual investment project to attract investment capital, using money taken from new investors to set up the pyramid scheme, offering an interest rate of 1.8 percent a day. When it was no longer able to pay off interest, the company created a new virtual currency, VNCOINS, setting their own price and 2.5 percent daily interest to attract buyers. It turned out to be another ‘junk’ currency with no transaction value.

In some cases, the collapse of cryptocurrency mining firms resulted from fluctuations in the global cryptocurrency markets. After peaking at $19,783 in December 2017, Bitcoin has fallen by 80 percent in value. This has caused previously profitable mining rigs to incur heavy losses, unable to cover operating costs.

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