Vietnamese authorities are investigating two allegedly fraudulent initial coin offerings (ICOs) which may have affected as many as 32,000 investors, losing up to USD 660 million.
The ICOs, Ifan and Pincoin, according to Vietnam’s Tuoi Tre News, are reported to bear some of the hallmarks of Ponzi schemes, alerting authorities and sparking an official investigation in the Southeast Asian country.
Investors protesting against the ICOs on the weekend gathered outside Modern Tech’s Ho Chi Minh City headquarters demanding refunds. Modern Tech, which claimed to be the authorized agent for both Ifan and Pincoin, was based in Ho Chi Minh City’s Vietnamreal building which had been cleaned out by its owner a month prior to the events.
The ICOs were launched through conferences in Hanoi and remote areas of the country in order to lure in customers. Investigators grew suspicious when commissions began to be paid in digital coins rather than fiat currency. Investors were then unable to withdraw their cash despite observing their investments accrue value.
Singapore-created Ifan described itself as “the most advanced social network [for] celebrities and artists enabling a better connection with fans”. Pincoin, initiated in Dubai, simply described itself as an “investment opportunity” promising up to 40% in monthly profits.
The police chief of Ho Chi Minh City commented that “all cryptocurrencies and transactions in cryptocurrencies are illegal in Vietnam… we haven’t officially launched an investigation until we receive accusations from any of the alleged victims”.
Reuters claims to have seen a copy of Prime Minister Nguyễn Xuân Phúc’s directive instructing the State Bank of Vietnam to cease allowing financial services that relate to cryptocurrency. The directive included measures to counter money laundering and counter terrorist activity through cryptocurrency.
Last year, Vietnam announced that it was considering a legal framework for the management of cryptocurrencies due to their increased popularity in the country. These moves have been reflected in other Asian countries in order to alleviate the risks of fraud.