Vietnam Investigates Alleged $660 Million ICO Fraud of Pincoin, Ifan

Vietnamese authorities have asked local ministries and the police to investigate two allegedly fraudulent initial coin offerings (ICOs) that conned 32,000 investors out of a staggering $660 million.

The operators of the purported ‘cryptocurrency’ startups fundamentally conducted multi-level marketing schemes, local news outlet Tuoi Tre News reports, pointing the finger at Pincoin and Ifan that claim to be from Dubai and Singapore respectively. The two startups raised money through initial coin offerings under the control of Ho Chi Minh-based Modern Tech, the alleged operator who claims to be the authorized local representative for the two schemes in the country.

An estimated 32,000 investors were persuaded into investing into the schemes that incentivized older investors to rope in new investors. In a further sign of a brazen ponzi fraud, Pincoin – which claims to be an Ethereum standard ERC-20 token – claims to offer investors returns of up to 40% every month on its website that is complete with a picture of a yellow Lamborghini.

While details are scarce about the longevity of the two alleged scams, investors reportedly began to sense trouble after Modern Tech stopped paying commissions in Vietnamese dong, the country’s fiat currency. Instead, they were paid in tokens which were never redeemable for cash, the report added.

It wasn’t long before investors turned up at Modern Tech’s office in downtown Ho Chi Minh to demand compensation from the company. The queries quickly turned to protests with dozens of disgruntled investors holding banners in front of the company including one that reads: “Cryptocurrency – the biggest multi-level scams, more than 15 trillion dong” ($658 million), pictures on social media showed.

A report from local publication Viet Bao the owner of the building that housed Modern Tech said the company had “already left and annulled its contract” in March. “No one knows where they are moving now,” he added.

A group of seven Vietnamese nationals are described as the ‘masterminds’ of promoting the alleged scams across Vietnam including Hanoi and Ho Chi Minh, the country’s two biggest cities.

The severity of the alleged scams, both in scale of its operation and the reported losses suffered by victims, has seen the office of Nguyen Xuan Phuc, Vietnam’s Prime Minister, publish a directive ordering the State Bank of Vietnam, the Ministry of Public Securities and other authorities to reinforce and strengthen the management of “activities related to bitcoin and other cryptocurrencies”.

A separate statement from Vietnam’s deputy prime minister Vuong Dinh Hue has ordered six governmental ministries to “quickly consider and take down” the scam.

While Vietnam was reported to have been preparing to legalize legitimate cryptocurrencies like bitcoin in mid-2017, the central bank has since enforced laws to prohibit the usage of bitcoin as legal tender in the country.