The Wellington-based community organisation Ekta New Zealand and GOPIO had partnered with Financial Market Authority (FMA) - New Zealand’s financial regulator - to host a seminar on Crypto-currency.
The launch of Facebook’s new crypto-currency ‘Libra’ has created a resurgence in interest in crypto-currencies – with many New Zealanders hoping to make a quick profit as their coins increase in value.
On Monday, July 8, over 30 people attended a seminar in Wellington by the FMA to learn more about crypto-currencies and how to protect themselves from scams.
Speaking to the Indian Weekender Ekta’s project leader, Jasmindar Kaur Singh, said, ‘’The public needs to be aware of the types of financial scams and some of the pitfalls with crypto-currency and similar schemes, as it’s not always what it’s made out to be.’’
Ekta said its objective in organising the seminar is for members of the Indian diaspora and other migrant communities to hear and directly engage with the Regulator on what protection New Zealand legislation provided and to hear how people were being scammed.
This is the second financial awareness seminar that Ekta has organised in recent months. The first was on “Overseas income and Tax implications in New Zealand”. We will also be organising another on “Kiwi Saver and Financial Management”.
Gillian Boyes, Investor Capability Manager at the FMA, told the audience “Crypto-currencies are high risk and can go up and down in value very quickly. Many crypto-currency exchanges are unregulated and operate exclusively online. This makes it hard to find out who is offering, exchanging, buying or selling it and very unlikely you’ll recover your money if things go wrong.
“Sadly, there are many scammers out there using clever tactics to rip-off New Zealanders and using crypto-currencies can make you a target for other types of high-risk investment scams.”
What are crypto-currencies?
Crypto-currencies are digital tokens you can buy online and use to buy goods or services from anyone willing to accept it. They are not legal tender and do not exist physically as notes and coins. There are over 1,300 different crypto-currencies with some of the most well-known ones being bitcoin, ethereum, ripple and litecoin.
3 things to know
They can change in value very quickly
There are lots of crypto-currencies available. If one becomes popular its value may increase quickly, but its value can also suddenly drop, sometimes permanently.
The risk increases if you invest in the futures market through contracts for differences (CFDs) where you make (or lose) money by predicting how the price of crypto-currencies might change.
Your ‘coins’ may be stolen
All online transactions are at risk of hacking or other types of cyber-crime. The crypto-currency in your digital wallet can be stolen just like the money in your real wallet – with very little chance of it being returned.
Crypto-currency market places and exchanges can also be at risk of cyber-attack.
They aren’t widely accepted
Crypto-currencies have less practical value than money which can be used to buy all goods and services.
Make sure any New Zealand exchange you use:
is registered on the Financial Service Providers Register (FSPR)
is a member of a dispute resolution scheme
holds your New Zealand dollars in a trust account.
Know what you’re getting into, including how the currency is stored and transferred, and how to get your money back.
Warning signs of scams
Ms Boyles mentioned that crypto-currency scams are just one of many types of investment scams used by fraudsters in New Zealand. She said that to avoid being scammed, the FMA recommends people look out for the following warning signs:
A stranger calls or emails you about an investment opportunity. Ignore them. Hang up or do not answer the email. It is illegal in New Zealand to sell financial products through cold-calling or other unsolicited communication.
They promise you very high returns, with little risk. These promises are nearly always too good to be true.
They tell you the offer is known only to a select few and should be kept a secret. This is often a ploy to make you feel special and to stop you speaking to an adviser or the authorities. A legitimate business will always give you an opportunity to seek professional advice from someone you choose yourself.
The person/business gives you little or no information in writing. All legitimate investments must have documents explaining the investment in plain English.