CEO of Vietnamese Cryptocurrency Mining Firm Absconds with $35 million

Le Minh Tam, the CEO of Ho Chi Minh City-based cryptocurrency mining company Sky Mining, has been AWOL since the 26th of July, according to local news outlet Vnexpress. With the disappearance of his company, approximately 5,000 investors stand to lose an estimated $35 million.

300% in 12 months

Sky Mining is a company dealing in cryptocurrency mining devices. People sent money to buy shares in the devices, and reap a share of the profits. For an investment of between $100 and $5,000 they were promised a return of 300% in 12 months. They would also receive a mining device, which they would use for 15-18 months before returning it the company.

Time to buy the dip?

According to the Saigon Times, one female investor said that Tam asked selected customers to collect their machines from the company’s mining facility in Bien Hoa Town on the 26th of July, but they found the premises closed and empty. 600 mining machines in total were taken by “maintenance workers”. The company’s office in Phu Nhuan District had also been vacated.

A letter from Tam published in media outlet Thanh Nien said that the mining machines were no longer profitable and he was forced to sell them to cover his losses. He escaped in fear of his life. Then on the 29th of July, Tam posted a video to a Telegram chat group promising to come back soon and that the company will return to profitability.

Death threats

Le Minh Hieu, deputy chairman of Sky Mining, attempted to form an interim board of 16 people to cope with the crisis, but received death threats against himself and his family from cheated investors and had to cancel.

“[The board] has reported this to the police and showed evidence that we are not guilty,” said Hieu. “We are victims too.”

Hieu believes that Tam has fled to the US with a large amount of money. He added that Tam was able to execute his theft because he had directly managed all mining activities .

A group of 20 investors have filed a complaint with local police and one female investor has filed a lawsuit, claiming losses of VND6.25 billion (approximately $269,000).

However Vo Do Thang, Director of the Athena Network Security Training Center in Ho Chi Minh City, told VNexpress that the chance of people getting their money back is practically zero. “Currently, models such as Sky Mining is completely out of the legal field,” he said.

Cryptocurrency crackdown 

On the 26th of July 2018, the State Securities Commission of Vietnam, the country’s financial regulator, banned all Vietnamese companies from engaging in cryptocurrency-related activities. This decision was undoubtedly influenced by the events of April, when two ICOs stole $660 million from an estimated 32,000 investors. Two startups – Ifan of Singapore and Pincoin of Dubai – worked through a Ho Chi Minh City-based company called Modern Tech to attract Vietnamese people to invest in what were effectively classic Ponzi schemes.

In January 2018, the State Bank of Vietnam enacted a ban the use of Bitcoin as legal tender, on pain of criminal prosecution and a fine of approximately $9,000. The ban was first proposed in October 2017.

In addition to thus, on the 19th of July the State Bank of Vietnam agreed to enforce a ban on the importation of mining devices, which had been proposed by the Ministry of Industry and Trade a month earlier. The proposal was itself a response to a request from the Ministry of Finance in May.

News outlet Xinhua reported in June that 9,300 mining devices were imported into Vietnam in 2017 and 6,300 in the first four months of 2018.