Chinese Bitcoin exchange GBL has shut down, taking with it over 25 million yuan (£2.5m, $US4.1m) of investors’ money, in another warning to those who don’t look before they leap with the digital currency.
Users first suspected something was up on October 26th when they could no longer access the site of Global Bond Limited (GBL), according to Coindesk.
On closer inspection, the office address in Hong Kong was found to be empty, its QQ instant messaging contact unresponsive and customer-facing phone lines silent.
GBL only appeared on the Bitcoin scene back in June, after it claimed to have been granted a license by the Hong Kong government to operate a virtual currency exchange business.
However, while it had registered with the authorities, they apparently did not grant it a license to operate as a financial services company.
It was discovered that the firm was using its Hong Kong status merely to appear more legit to investors, and that in fact its servers were located Beijing.
This info was posted to the Bitcoin Forum as far back as May, when the firm seems to have been set up.
Depending on which reports you believe, the exchange managed to attract between 500-1000 investors, all keen to jump on the Bitcoin bandwagon.
Only after the site closed at the end of last month did the majority suspect anything – apparently attracted to the platform by fee waivers and other financial inducements.
The demise of GBL will certainly do the reputation of Bitcoin no favours, especially since regulators across the globe seem uncertain how to respond to the digital currency.
However, potentially of more damage are reports like the one last week, which claimed the platform could be hijacked by “selfish” Bitcoin miners. ®