Hanoi, Vietnam will Attempt to Prohibit Cryptocurrency for E-Commerce

Hanoi, Vietnam will Attempt to Prohibit Cryptocurrency for E-Commerce

 Protestors affected by the massive fraud committed by the Ifan and Pincoin ICOs 

Protestors affected by the massive fraud committed by the Ifan and Pincoin ICOs 

Sparked by the major ICO fraud which took place earlier this month, Vietnam's Hanoi Department of Industry and Trade, has gone as far as to declare use of cryptocurrency as an illicit activity. In said fraud, the largest crypto-fraud in history, approximately 32,000 people were affected, losing around $658 million USD (VND15 trillion). The two ICO's implicated in the scam are Ifan, which promised "risk-free activity", and Pincoin, which made the lofty return promise of "up to 40% monthly". The structure of both Ifan and Pincoin, whose whitepapers are still available online, seem to resemble that of a Ponzi Scheme. The ICOs pyramidically, promised those "...40% monthly" returns by using bonus structures which favor the earlier investors, over later investors; additionally promising bonuses (8%) for recruiting new investors to the ICO. Protestors were present in Saigon, outside of the Modern Tech JSC Co, responsible for marketing the Ifan tokens, however this specific location was an apparent ghost address, as there was nothing to indicate that the company was ever actually present. Similar to what occurred recently in India, investors began to get suspicious when they noticed that their commission returns, which were previously paid out in fiat currency, were suddenly changed to payouts in "tokens", which bared no liquidity. 

As a response to this massive fraud, the Prime Minister, Nguyễn Xuân Phúc, signed this directive: 

To limit the risks and adverse impacts on society, as well as promptly detect, prevent and handle fraud, the Prime Minister asked the State Bank of Vietnam (SBV) to direct credit institutions and intermediary payment service organisations not to conduct illegal transactions related to digital currencies.

Moving a step further, on Saturday, the Hanoi Department of Industry and Trade has decided to completely prohibit any organization, or individual involved in e-commerce, from utilizing any form of cryptocurrency, as stated here: 

The Department of Industry and Trade requires organizations and individuals who are directly or indirectly involved in e-commerce business in Hanoi to strictly abide by the above-mentioned regulations and do not use bitcoin and other virtual currencies….in payment of e-commerce transactions, online purchases and sales, [and] payment [of] online services in contravention of Vietnamese law.

Further explaining Hanoi's Decree No. 101/2012 / ND-CP on non-cash payment instruments:

Bitcoin and other similar virtual currencies are not legal means of payment in Vietnam; The issuance, supply, use of bitcoin and similar virtual currency is prohibited in Vietnam

The decree warns that those found in violation of this law may be subject to a "fine of between VND 150,000,000 [~US$6,608] and 200,000,000 [~$8,810] for individuals and for organizations with two times the fine level for personal" and as of January of this year, anyone issuing or using cryptocurrencies, "may be subject to criminal prosecution". 

While it seems that the intentions of Vietnamese governing bodies, and more specifically the city of Hanoi's, come from a protective point of view, with the best interest of its citizens in mind, banning cryptocurrencies is not possible. As cryptocurrencies grow in popularity and expand to other fields of practical use, the ban on something flooding into the global market would resemble a person attempting to use a broom to sweep the tide back into the ocean, it's just too big try block out. However, allowing for greater education (to both government institutions, and individuals), will help to give those people and institutions the ability to see the value, risks and validity of offered ICOs, and already well-established cryptocurrencies, like Bitcoin. We hope the best for Vietnam's lawmakers and, justice for the 32,000 people affected by this greed-driven tragedy. 

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