Whatever happened to / Cambodia’s ‘government-backed’ cryptocurrency?

By: Robin Spiess - Posted on: June 19, 2018 | Business

News of a cryptocurrency endorsed by the Cambodian government began circulating earlier this year, with international media also picking up the story. Then suddenly, it all went quiet. So what exactly happened to Entapay – the company behind it – and its ambitions to create a Cambodian cryptocurrency?

A golden Bitcoin is pictured in Duesseldorf, Germany. Bitcoin was the world’s first cryptocurrency, but now there are more than 1,500 worldwide Photo: Sascha Steinbach / EPA-EFE

It was less an office as much as it was a lavish home, outfitted with chandeliers, plush couches and an imposingly large foyer decorated in red and gold hues. Situated in the heart of Phnom Penh’s Tuol Kork District, the sizeable house sat comfortably in line with the large villas dotted along the road.

Golden plaques, each fastened to the wall beside the front door, boldly read out the names of agencies housed within the building, including the China Commerce in Cambodia Association and three other China-based businesses.

Though the building was meant to house the head office for Entapay, a cryptocurrency founded by Chinese businessmen and launched in Cambodia earlier this year, no mention of either the crypto or its partner organisation, the freshly founded Cambodia Blockchain Industry Development Association, could be found at the site.

“Entapay? No, no, they’re not here,” said a man working in the building who identified himself as a secretary named ‘Spark’. “They were here before, months ago. Maybe they moved their office, or they probably went back to China.”

While no evidence of Entapay remained at the site, photos adorning the walls of the waiting room pictured prominent Chinese businessmen shaking hands with the Cambodian elite who had purportedly lent the Entapay project their official support, including Deputy Prime Minister Men Sam An and Hing Bun Heang, the unit commander of Hun Sen’s bodyguards.

Though neither Men Sam An nor Hing Bun Heang ever confirmed their endorsement for the Entapay project, with Bun Heang telling local media outlets that his good name was being used by “bad people” when contacted for comment, both of their photos remain on the Entapay website, where they are listed as supporters of the project.

The curious case of a cambodian cryptocurrency

Entapay wasn’t the first cryptocurrency to try to launch in Cambodia, but it was the first to make broad claims of local governmental support.

In early March, Entapay published a press release stating that Cambodia would be “trying to issue legal digital tender” by “following Venezuela’s lead” after the South American country began piloting its own government-backed cryptocurrency, called Petro, earlier this year.

In likening itself to Petro, Entapay drew the attention of several international news outlets – including the UK-based Telegram and Express publications – that announced the Cambodian government’s intention to adopt a national cryptocurrency.

But to those on the ground in Cambodia, this seemed unlikely. The Cambodian government has continuously warned against the use of cryptocurrencies in the Kingdom. When contacted, both the National Bank of Cambodia (NBC) and the Securities and Exchange Commission of Cambodia (SECC) denounced the rumours that Entapay was somehow supported or licenced by the government.

Entapay’s founders, Chinese businessmen Hannibal Song and Weibin Deng, met with local news outlets in March to “alleviate any misconceptions” that might have been spread as a result of their suggestive press release.

Speaking through their translator, public relations specialist Richard Lee, the two men admitted that Entapay was not officially endorsed by the Cambodian government, and explained that they had not been in contact with the NBC or SECC to discuss the legality of their crypto project.

“We’re going to be getting a licence that never existed before, so we’re not sure who is going to be handling it,” said Lee. “We are going to meet [Prime Minister] Hun Sen in April. And we are going to apply for the licence from him, directly.”

Song, Deng and Lee have not been available for comment since, and their Cambodian crypto project seems to have all but fizzled out.

The Entapay website still boasts of endorsements from Deputy Prime Minister Men Sam An and Hing Bun Heang, the unit commander of Hun Sen’s bodyguards

Uncertainty regarding cryptos

While it’s not often that freshly launched cryptocurrencies make false claims of being government-backed and founded, it isn’t uncommon to see new cryptos celebrate their launches only to shut down weeks or months later. Some simply lose steam as investor interest dies down; others fail due to more sinister causes.

Cryptos are highly susceptible to fraudulent activity, and can often fall victim to hackers or prove to be scams themselves. Cryptocurrency scams and hacks amounted to $670 million in the first quarter of 2018, which accounts for some of the highest losses the crypto community has seen since the founding of the digital coin, according to Business Insider.

Southeast Asia has seen its fair share of crypto mania in recent months. In Thailand, local reports say that a cryptocurrency scam targeting Buddhist monks reeled in over 800 supposed ‘investors’, while a massive Vietnam-based scam affecting more than 32,000 people resulted in an investor loss upward of $600 million.

The National Bank of Cambodia (NBC) has taken note of this trend, and has often taken a hard line against budding cryptocurrencies as a result. Chea Serey, the NBC’s director general, warned at an economic conference in early December that cryptocurrencies were ‘very risky’.

“You should all be cautious if you are lobbied to accept the coins as a form of payment instead of regulated cash currency. This is a new form of fraud,” she said at the time. “Digital coins are not legal in Cambodia, and we don’t recognise or accept them as financial instruments.”