Friday, 16 Nov 2018
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ECONOMY

Vietnam cryptocurrency CEO disappears with investors' US$35 million

Updated at Wednesday, 01 Aug 2018, 13:13
The Hanoitimes - In addition to prospects of high profit to attract investors, the lack of legal framework to manage cryptocurrencies is considered one of the main reasons behind recent large-scale scams.
Le Minh Tam, CEO of Vietnamese cryptocurrency mining firm Sky Mining, has reportedly fled with over US$35 million of 5,000 investors, raising fear of a repetition of previous US$660 million-cryptocurrency scam in Ifan and Pincoin.
 
Illustrative photo.
Illustrative photo.
Tam later reappeared on a Sky Mining Telegram group where the businessman claimed that he is currently undergoing medical treatment in the United States and will return to Vietnam. 

However, investors are dubious about his promise, especially when all the mining rigs were nowhere to be found in Sky Mining's facility, while the main office was closed and all of the signage has been removed. 

Previously, the self-proclaimed largest crypto mining company in Vietnam promised a return of 300% in 12 months for investors who purchased mining rigs with the company, ranging from US$100 - US$5,000.

According to experts, this was actually a form of mobilizing capital with high interest rates, known as multi-level marketing. 

This case resembles the allegedly fraudulent initial coin offering (ICO) of Ifan and Pincoin cryptocurrency in April, when 32,000 people lost VND15 trillion (US$660 million) in "Vietnam's largest cryptocurrency fraud". 

Modern Tech, the company which raised money from token sales of Ifan and Pincoin, promised investors buying those cryptocurrencies with the lowest return of 48% per month and a payback period of four months. 

If an investor invites other people to participate, they will receive a commission of 8%. 

Lack of legal framework

In addition to prospects of high profit to attract investors, the lack of legal framework to manage cryptocurrencies is considered a main reasons behind recent large scale scams. 

At present, citizens and enterprises are urged to restrain from making transactions in cryptocurrencies. Given their extreme volatility and lack of regulation, cryptocurrencies carry potential risks to investors. On the other hand, as claimed by the State Bank of Vietnam (SBV), cryptocurrencies transactions are anonymous and can be used for money laundering, drug trafficking, tax evasion, and illegal payments.

Can Van Luc, a banking expert stressed the necessity of having regulations to manage and deal with virtual assets and criptocurrencies, with the aim of reducing risks for the society and ensure safety of financial markets. 

In early April, Prime Minister Nguyen Xuan Phuc urged greater vigilance against cryptocurrency transaction and investments. In a directive, the PM requested the State Bank of Vietnam (SBV), the Ministry of Public Security and other bodies to tighten the "management of activities related to Bitcoin and other cryptocurrencies."

The Ministry of Finance in June proposed a temporary ban on the import of mining rigs, citing the exploitation of those machines for launching new currencies or a new form of payments as reason. 
Ngoc Thuy
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