Business 30 July 2018Gerald Fenech
Gambling coin Withcoin hit with $12M class action suit
Withcoin, a cryptocurrency designed for casinos, has been accused of propagating lies. The virtual currency, which has been listed on the HitBTC exchange since May, used a promotional video that allegedly showed misleading information, according to a class action lawsuit in Japan.
An overview on the Enjin Class Action site identified Koichi Matsuyama as the person responsible for spreading the video, which lured investors into buying Withcoin with the sales pitch: “If you buy it today you can become a millionaire.”
It was later discovered that what Matsuyama promised was a lie, according to the Enjin overview. In January, 1 Withcoin was valued at JPY0.5 ($0.0045); however, investors were allowed to buy the coins by large chunks of JPY10 million ($90,046). Matsuyama also inexplicably changed Withcoin’s exchange from Binance to HitBTC, and claimed that the coin “can be used in Okada Manila.” A representative for Universal Entertainment Corporation, which operates Okada Manila, told news.bitcoin.com that the Philippine-based integrated resort “has never authorized or partnered with anyone regarding the use of Bitcoin or other cryptocurrency.”
Its white paper described Withcoin as “an innovative money-transfer and automatic foreign-exchange platform to transfer money to land-based and online casinos through cryptocurrency.” The team behind the coin promised to “realize a digital currency platform for anyone to easily participate in casinos,” by automating operational procedures using Ethereum smart contract functions.
Withcoin buyers said they suffered large losses after the coin fell to about 1/10 of the ICO price. Then two weeks after being listed, Withcoin crashed to JPY0.139 (0.0013). In June, 420 victims gathered on Enjin to file a class-action lawsuit seeking damages of over JPY1.3 billion ($12 million). According to the Enjin class action page, because Matsuyama and his company provided false information to sell Withcoin, this invalidated the sales contracts, meaning the victims can claim full refund in Japanese yen at the rate when the coins were sold.
Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as BTC coins; tokens on the Bitcoin Cash ABC chain are referenced as BCH, BCH-ABC or BAB coins.
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