Once upon a time in cyberspace, a shadowy figure named Dr Kimoto Chan (a pseudonym) created a virtual "currency". He named it Megacoin.

In May last year, Megacoin was revealed to the world on a website with a New Zealand domain name. Megacoin.co.nz's name and logo more than slightly resembled Kim Dotcom's mega.co.nz, and believers were convinced Kimoto was Kim Dotcom. The site claimed Megacoins were: "A new type of decentralised currency. Not minted or endorsed by any nation, but by users across the globe".

But last month, Kim Dotcom was asked if he had anything to do with Megacoin. "Nothing at all," he replied, categorically.

Two weeks later, Megacoin appeared on TV3's news bulletin. The brief piece made a compelling sales pitch for Megacoin. The most notable commentary came from an early investor, Raglan student Matthew Meek, who claimed he made a 7500 per cent gain on his Bitcoin and Megacoins stakes - turning $2000 into $150,000.

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Enter Daniel Ayers. Made aware of the news story by co-workers, the computer forensic scientist and IT security consultant thought Megacoin.co.nz sounded too good to be true. He discovered the domain was not correctly registered and blew the whistle to the NZ Domain Name Commission. Megacoin's anonymous owner briefly took it down.

Ayers also discovered, through overseas blog postings and Megacoin's public ledger, that about 6 million Megacoins were stashed away in the first week of Megacoin's existence, before the public embraced the currency.

"If the originators are successful in raising the value of Megacoin by hiding the fact they secretly hold a large proportion of them," says Ayers, "then a great deal of money could potentially be made out of thin air."

The Cryptolife blog had argued most of those 6 million coins were mined by the creators, giving them a toehold before the currency appreciated in value.

"You'll notice that the community is very reminiscent of a cult," the blogger wrote. "They'll tell you straight-faced that Megacoin is on track to overtake Bitcoin. They'll preach on and on about how fairly Megacoin was launched."

Today, Megacoin.co.nz is back - and Matt Meek is named as registrant. Meek, a 23-year-old Wintec student, insists he hasn't been sucked in by any scam. He says he was asked by an anonymous Australia-based administrator, who calls himself AlienWalker, to register the domain in his name. "It's not illegal or anything, so I didn't see the problem in doing it."

But neither has he made real money out of it: his $150,000 has shrunk to $100,000 as the value of Bitcoins and Megacoins declines, especially this week after the collapse of the Mt Gox exchange. It is digital money until he cashes out by converting it to old-fashioned dollars and cents. If NZ-registered Megacoin were to collapse in the way that Tokyo-based Mt Gox did this week, Meek would lose thousands of dollars.

When we email Megacoin for comment, AlienWalker assures us the currency is totally legit. He dismisses claims its creators had pocketed 6 million of its 20 million coins before properly launching it.

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AlienWalker explains the website is based in NZ because of the developers' "familiarity with the technology landscape", and says Megacoin has improved the Bitcoin model, including faster processing times.

The Megacoin.co.nz domain was first registered to a company in Bombay, India. But Meek's only contact is through AlienWalker, aka Alan. That doesn't worry him.

"The community works together to make their coin more successful, so the survival of a coin basically depends on the community that supports it."