Vietnamese investors fall for $650 mln cryptocurrency scam

A Vietnamese IT firm has come under fire from investors who claim it scammed VND15 trillion ($650 mln) from them in a cryptocurrency ponzi scheme.

Dozens of people descended on the headquarters of Modern Tech in Ho Chi Minh City's District 1 on Sunday demanding refunds from the company for the cryptocurrencies it claimed to represent.

Victims claimed to have been invited to various conferences held by Modern Tech as it was attempting to mobilize capital.

Speakers at these conferences claimed to be successful businesspeople and encouraged participants to invest in the company's cryptocurrencies, including iFan and Pincoin.

The company claimed the two cryptocurrencies had been established in Singapore and Dubai respectively, which contradicts data from analytics website SimilarWeb that says that 91 percent of visitors to iFan.io, the main website for the currency, are from Vietnam.

iFan, as explained on its website, is a platform used in show business to provide artists with a more effective way of connecting with their fans so they buy songs and concert tickets using iFan coins.

According to the disgruntled investors, the virtual currency had operated in a similar way to a multi-level business model, or pyramid platform. Modern Tech guaranteed that the lowest interest they would receive would be 48 percent per month, with a payback period of less than four months. In addition, if investors could find a new entrant, they would receive an additional 8 percent.

In the beginning, Modern Tech paid investors via bank transfers. However, it quickly switched to using its virtual currency, while at the same time increasing its minimum investment limit, forcing investors to pour more money in.

At the end of 2017, interest payments started to come in late, according to Quang, who claimed to have invested a total of VND130 million ($5,733) in iFan coins. When Quang raised the question in a private chat group of iFan investors, he was immediately removed with an offer of about VND10 million in compensation, just 7.6 percent of what he had invested.

Quang is among a small group of victims trying to create a public protest to demand a refund.

However, most victims are silently accepting the fact that their money has gone.

As stated on iFan’s website: “The token provided by this website carries a high level of risk and can result in the loss of all your funds.”

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.

Each investor holds between a 12 and 15 percent share in the company, which has only 9 staff members, according to Ho Chi Minh City's tax authorities.

Modern Tech's legal representative has been named as Ho Xuan Van, born in 1988.

However, the company’s phone number was answered by a woman, who claimed to be hired by Modern Tech for a few million VND to represent the company and establish the business.

A trip to Modern Tech’s supposed offices in Ho Chi Minh City also turned out to be in vain, as the building's management said the space had been empty since the lease was signed.

Despite multiple requests from the media in recent days, Modern Tech representatives have not responded to the accusations, and its founders have remained off the radar.

As cryptocurrency is illegal in Vietnam, Le Thanh Liem, vice chairman of Ho Chi Minh City, has asked the city's police to launch an investigation.