In 2014, a local government initiative in the United Kingdom unveiled Hullcoin, an effort to use cryptocurrencies to fight the problem of regional poverty.
Yet new reports indicate that the philanthropic effort spawned an investment scam halfway across the world, as news has emerged that a group of investors have been scammed by a group of individuals selling investment packages based on Hullcoin.
According to China News Service and China National Radio (CNR), as many as 500 people in the region lost $1.1m, or 7.1 million yuan, after trying to invest in what was pitched as Hullcoin. One investor told local media that he paid in roughly $40,000 to invest.
Complaints appear to have begun coming in after a website for depositing funds for Hullcoin purchases went offline. Local authorities are now reportedly investigating the incident.
Those associated with the Hullcoin project in the UK say they have no involvement with the Chinese investment scheme. David Shepherdson, who as the Hull City Council’s former financial inclusion officer was involved in the cryptocurrency’s creation, said those involved first heard about it through recent posts on social media.
He told CoinDesk:
“We can categorically state that we have not had any communication or involvement with the company in question with our work here developing HullCoin, which is almost exclusively invested with charitable funds.”
Despite the apparent lack of connection, those involved in the Chinese scheme sought to use that project’s details and headline-grabbing aspects to seek investments, according to online materials.
Investment gains pitched
A web page devoted to the Chinese Hullcoin investment scheme features a number of pages detailing the launch of the local government council’s cryptocurrency in the UK, and even has a quote attributed to Shepherdson.
The page also offers promotional details for potential investors, promising outsized returns when all of the available coins – in this case, 30 million over the fake Hullcoin’s lifecycle – have been produced.
While details remain limited, information on the Hullcoin China website point to an effort to project legitimacy to those interested in investing, including an official corporate registration in the UK.
The company behind the scheme, UK Hull Coins Investment Trading Co., LTD, is registered in Hull, according to public data published by the British government. Only one officer is listed, an individual named Shengqiang Su.
A claimed investment and finance conference focused on Hullcoin sought to further position the scheme’s legitimacy. An article posted to the Hullcoin China website claims that the conference was held in November in the city of Changsha, at which a process was begun to “meet the market demand” for more Hullcoins.
The website goes on to claim:
“At present, the hull currency in the UK and China for synchronous operation, the initial price is $0.1, the price with the market has gone up. As a virtual currency, Hull, the annual income of tens of times is not a problem. Hull currency in China since the trial operation, the achievement of a lot of young entrepreneurs. At present, Hull’s investment in the initial stage, investment costs are relatively low.”
But local reports indicate that this event didn’t actually happen.
CNR reported that this conference never took place after local journalists visited the city. According to the same report a publicized office location in Hong Kong would ultimately prove to not exist as well.
An email address provided on the Hullcoin China website did not return an email by press time.
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