Bitcoin in the Headlines: Hong Kong’s MyCoin Sparks Global Conversation

Yessi Bello Perez
Feb 13, 2015 at 20:35 UTC
Updated Feb 20, 2015 at 16:15 UTC
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Bitcoin in the Headlines is a weekly look at global bitcoin news, analysing media coverage and its impact.

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Bitcoin has been hung out to dry many times before in the media as part of reports that supporters argue often overemphasise its involvement in criminal activities.

Its reputation often suffers due to the lack of information – or misinformation – available.

If the Silk Road Trial did not do enough to put bitcoin under scrutiny, the recent scandal at Hong Kong bitcoin exchange MyCoin certainly fueled new skepticism around the digital currency.

What was said about bitcoin this week and where? CoinDesk takes a look at the top headlines across the globe.

MyCoin dominates news narrative

The South China Morning Post (SCMP) was the first outlet to break the story that MyCoin, a Hong-Kong based company, may have left “as many as 3,000 local investors with combined losses of HK$3bn, on 9th February.

The SCMP article labeled MyCoin a “bitcoin trading platform”, a description that would prove significant as the story unfolded.

Two days later, the publication ran with the following headline. The words “bitcoin” and “pyramid scheme” were certainly going to attract some attention.

At the time of press, a search on Google News brought up 46,200 results and over 100 articles addressing the incident, even reaching Israeli news sources, a rare feat for any bitcoin story.

As the situation unfolded, it became somewhat evident that bitcoin was being linked to criminal activity, as yet another company hid behind its premise of alleged anonymity to fulfil its illegitimate objectives.

The piece noted that “there is no direct link between bitcoin and the popularity of this alleged fraud”.

It continued: “There are rogues everywhere and in every field. However, the authorities are searching for as many reasons to act against bitcoin, a hard currency to supervise, and this story will certainly give it some more ammunition in the crusade against it”.

Headlines inspire action in Hong Kong

Despite the situation becoming more apparent as facts came to light, the original report does seem to have had an impact on shaping public perception.

The Hong Kong Commercial Crime Bureau (CCB) is already conducting a preliminary investigation into the alleged unlawful activities that may have taken place at the now defunct company.

Leung Yiu-chung, a lawmaker cited in the article, expressed his concern about the Hong Kong’s Monetary Authority’s response, stating:

 “As bitcoin is not a currency, it does not fall under its oversight.”

As he called on the authority to ban the sale of bitcoin in Hong Kong, he highlighted that the digital currency “was more than just an investment product”, adding that “in fact bitcoins can be used for shopping, which resembles [one of the functions] of currency”.

By this time, the story had caught wind and continued to spread.

Reuters then ran a story about Hong Kong’s central bank warning consumers against investing in virtual currencies, amid local reports that a “Hong Kong bitcoin exchange” may have run off with $387 million in client funds.

The outlet noted that not only was the amount allegedly stolen hugely significant, but the scandal could also potentially be the biggest bitcoin related story in the region since the bankruptcy of Tokyo-based Mt Gox.

The outlet also cited the Hong Kong Monetary Authority (HKMA), which cautiously released a statement saying that the case “may involve fraud or pyramid schemes,” adding:

“Given the highly speculative nature of bitcoin, we have all along urged the public to exercise extra caution when considering making transactions or investments with bitcoin.”

On the same day, Quartz published a piece that headlined with “The MyCoin scandal in Hong Kong had nothing to do with actual bitcoins“.

In the article, Heather Timmons, cites various sources, including Leo Weese, the president of the Bitcoin Association of Hong Kong, who says that it is likely that the exchange never held any bitcoin.

“It looks like it was an elaborate hoax – probably a Ponzi scheme,” noted Timmons.

Positivity for emerging markets

Although the coverage may have focused on the bad and the ugly, there are also positive conclusions to be drawn from this week’s coverage, especially as publications commented on bitcoin’s impact in emerging markets.

Techcrunch’s Christine Magee put it rather well when she said that “while the tech world is busy speculating about bitcoin’s volatile value, cryptocurrency is making arguably its biggest impact in countries where the current price of 1 bitcoin exceeds the average salary earned in a week”.

Kenya, Uruguay and Panama are just some of the few countries playing host to an increasing group of venture-backed bitcoin companies that are utilising the blockchain technology to tackle regional payments challenges.

The news comes after the launch of Mondome, a bitcoin comparison site that seeks out to boost remittances in the digital currency.

The analogy between bitcoin and the internet was regurgitated by Business Insider, which published a profile on Xapo CEO Wences Casares, with “Star Silicon Valley entrepreneur: Here’s why bitcoin will be bigger than the internet” as its headline.

A serial entrepreneur, Casares created Argentina’s first internet provider and later sold his online brokerage firm to Banco Santander for $750 million in 2000. He provides a refreshingly different – albeit bold – view on the future of bitcoin, stating:

“I think bitcoin may very well be the best form of money we’ve ever seen in the history of civilisation.”

The future holds many questions for bitcoin, but it seems that the media media coverage is willing to showcase both the extreme positives and negatives of the digital currency – at least for now.

Newspaper image via Shutterstock