Crypto Ponzi scheme exposed

May 23, 2022 8:00 am

A person falling for an online scam. [Source: 1News]

A fake company operating an offshore cryptocurrency investment scheme has been investigated by police after multiple people fell victim to the scam.

Detective Sergeant James Robson, of the Auckland City financial crime unit, said police received reports involving a company calling itself Quwiex Limited.

It claimed it could offer investors high daily returns.

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“This company was registered in New Zealand in late September 2021 through information which has now been established as falsified,” said Robson.

The supposed director of the company had a New Zealand address but Robson said an investigation revealed the entire company was falsified.

“No actual links to New Zealand have been able to be identified, which means those involved in this scam are based offshore.”

Robson says the scheme has all the hallmarks of a Ponzi scheme – a fraudulent investment scheme in which the operator pays returns on investments derived from new investors, rather than from legitimate profits.

Those who had invested received some interest based on their investments, and were able to take money out.

“In mid-April, this scheme suspended withdrawal citing a website upgrade.

“However, the website was deactivated on the date the upgrade was supposed to be complete.”

Investors’ funds had disappeared.

“Police acknowledge the financial distress falling victim to one of these schemes can cause,” says Robson.

“Unfortunately, as these scammers are based offshore the likelihood of recovering their losses is quite low.”

Police are also warning victims not to engage with anyone offering the prospect of recovering their funds.

Police pointed to the Financial Markets Authority (FMA) as a first step when considering an investment.

The Authority routinely names businesses or individuals that investors should be wary of.

The FMA flagged Quwiex Limited on April 8, saying “the entity is offering financial services without being registered on the Financial Service Providers Register (FSPR) and is also making statements that appear to be false and misleading and/or unsubstantiated”.

A spokesperson for the FMA told 1News it continually issues warnings about scams targeting New Zealanders.

“Some of these operate in New Zealand, the vast majority are offshore.

“There have always been investment scams operating through various “shopfronts” – the shiny new thing at the moment is cryptocurrency.

“Many of them are just an online “shopfront” and are using crypto to bait you in.

“You need to do some checks before handing over your money. If you cannot verify that you are dealing with a legitimate company then don’t hand your money over, don’t respond.

“You should at the very least check the NZ FSPR (Financial Service Providers Register) to find out if the company is registered to be offering services in New Zealand. This will also give you access to a dispute resolution service.

“It is very hard for us to identify scams because they are operating outside the law, and we discover them when money has been lost when people report it. We rely on information from overseas regulators and enforcement agencies, as well as complaints from the public to be able to publish warnings promptly,” the spokesperson said.

The FMA says it can’t help recover financial losses if the company is based overseas.

“However, we can provide you with publicly available information about them, such as where they are registered and who their directors are from the Companies Office.”