Virtual money scheme offering 24% returns

PENANG: A company that describes itself as a social networking services provider (SNS) is offering returns of up to 24% per annum with virtual trading of coins.

Investors claim nobody has lost money in this “money game” and that it is the perfect money-making scheme.

However, there is a lack of transparency on how the company is able to generate such returns and the company’s key officials could not be contacted.

One investor expressed reservation as there were limited options to cash out of the scheme.

He said there was not much transparency on how the price of the coins was determined on a daily basis and restrictions on the amount that can be disposed of.

“If you hold the shares of a public-listed company, you can sell all your shares anytime.

“You may lose some money but there will always be a buyer.

“But with virtual coins, if there are no new members coming in to create demand for the virtual coins, there are no buyers,” he said.

The core basis of the scheme is a virtual trading platform that can be accessed through the Internet. Investors are given a password and login for them to access the virtual website to monitor the price of the coins.

A basic package would be US$5,000 to purchase 3,000 virtual coins from an agent.

The investor has to place RM22,500 with the agent because the conversion rate is fixed at RM4.50 to one US$1.

The 3,000 virtual coins are then converted into 10,000 units. The base value is US$0.30 per unit.

An investor said that normally the company would split the units after six to eight months. This means 10,000 units becomes 20,000 and then 40,000.

Assuming an investor disposes the entire 40,000 at 40 cents each, they would end up with US$16,000 in virtual currency.

However, you can only convert 55% of the US$16,000 into cash. The company buys it back at a fixed rate of RM3.80 per US$1.

“The investor would get about RM33,400 after a year and a half for an investment of RM22,500,” said the investor.

Of the remaining 45% of the returns, the investor is compelled to put back 30% into the system to buy more virtual coins.