A Chinese trading website for the virtual currency bitcoin which was unexpectedly shut down and caused losses in the millions of renminbi for users, was allegedly operating a Ponzi scheme, Shanghai's China Business News Daily reports.

Nearly 200 users joined an online group within six hours after they found they could no longer access the Hong Kong-registered bitcoin trading site Global Bond Limited on Oct. 26.

According to unofficial estimates, the number of users affected by the website's closure was around 500, and their combined losses may exceed 20 million yuan (US$3.28 million), the newspaper said.

Several users also went to the police for help, although law enforcement authorities in different jurisdictions have different methods of handling the individual cases.

Local authorities in Shanghai have not decided on the nature of the cases, which are currently being handled by the economic crime unit, while a user in Kunshan in Jiangsu province said local police consider such cases to be embezzlement rather than fraud.

A Hong Kong government website shows that the Global Bond Limited website was registered on June 10 as a company that operates several businesses including virtual currency exchange, investment consulting, and international trade. However, since it did not acquire any license to operate financial services, its website, which facilitated the trading of bitcoin, was likely in violation of Hong Kong's anti-money laundering laws and securities and futures regulations, the newspaper said.

One of the services that helped the website attract a large number of users, according to experienced bitcoin traders, was the trading of futures contracts for the virtual currency, which allowed returns of up to 10 times the original stake.

Moreover, the design of the website's trading mechanism, left loopholes that users could exploit and profit from, which also led to suspicion among some users, who had pulled out early as a result.

That the website hired brokers to help promote the website, has been described as similar to the operation of a pyramid scheme, the newspaper said.

An official with another bitcoin trading site, BTC China, told the daily that it is risky to trade in derivative products of the virtual currency, when the currency itself is not officially recognized by the government.