Hong Kong-based stock market commentator Raymond Yuen, nicknamed “The Young Wizard of Investment,” has been indicted for misleading people into investing in cryptocurrency cloud-mining services. New coins can be mined through cryptocurrency mining, and for the users that invest in online mining services, they are supposed to get a slice of the profits generated from the new coins.
Yuen’s mining investment scheme has accrued around HK$6.9 million from more than 12 investors (in the photo above wearing masks). The origin of each investors money is unknown, and there are some concerns that investors may have taken out loans based on Yuen’s promises of success. Losses are estimated to be at between HK$10,000 and HK$600,000.
Yuen had promised investors that they would get their investment back after 10 months, and then make large profits going forward. Investors started to realize these profits weren’t going to materialize when their returns became smaller and smaller. One investor had allegedly borrowed HK$200,000 only to get a return of HK$7 daily.
The Young Wizard of Investment has worked to build up an image for himself, an image of a successful and entrepreneurial financial expert. He built this status through two financial investment radio shows and a book on stock investments as well as his market commentating.
The allegations have an air of criminality surrounding them, with investors allegedly being asked to sign away their right to a class action lawsuit, one lawyer involved with the case referred to the contract investors signed as “a trap”. This move suggests that Yuen was willfully deceiving his investors about the potential the scheme had to generate profits. These people ultimately placed their trust in Yuen only to find themselves left empty handed when it came time for the profits to roll in.
With cryptocurrency companies being relatively in their infancy, the industry is still somewhat of a “wild-west” meaning we are seeing these types of schemes and scams. Cryptocurrency is still an area of finance that many people are ill-informed about, yet excited about its investment potential. However, the people who have been bitten continue to push back against this type of behavior and it is starting to shape the industry into a more regulated and controlled one with less room for malicious cowboys. More developments on the case are expected to surface in the coming months.