Law enforcement authorities in New Zealand are warning consumers in the crypto field to be on high alert after an investor lost the equivalent of more than $200,000 US dollars in a scam.
The investor, who has not been named, lost $320,000 New Zealand dollars in the fraud. It is believed that the money came from the investor’s life savings.
According to police, the investor was initially attracted to the scam scheme after those behind it promised a highly profitable return on investment.
Over time, the investor added steadily more money to the scheme and their earnings appeared to rise. The fraudsters kept encouraging the investor to add further cash into the scheme, which they did.
However, earnings then began to dip and the scam was revealed.
Police did not specify the technical details of the fraud, but said that it involved the major cryptocurrency Bitcoin.
“Members of the public should seek advice before making any online investments they are unsure of”, said Senior Sergeant Paul Reeves from the New Zealand Police.
“Scammers are extremely persistent and can seem very credible, as they are highly versed in their trade”, he added.
The police statement also said that anyone else who felt that they may have fallen victim to a crime should speak to their local police force.
It also linked to the CERT NZ page explaining what cryptocurrency is and how it can be used for nefarious purposes.
This is far from the first time that New Zealand has been affected by question marks over its cryptocurrency industry. Late last year, for example, the Financial Markets Authority told investors to stay away from a digital currency fundraising scheme called SMG Cash run by 19-year-old Ashutoush Sharma.
“We recommend New Zealand investors do not subscribe to this offer”, said a spokesperson for the regulator.
Earlier this year, the website Stuff reported that New Zealand is lagging behind parts of the rest of the world when it comes to cryptocurrency regulation.
In a white paper written by a variety of blockchain professionals, the Edmund Hillary Fellowship said that many Kiwi institutions were struggling to issue even some guidance on the matter.
By March of this year, the Inland Revenue Department (IRD) had never produced any sort of documentation advising how cryptocurrencies ought to be effectively taxed. Over the Tasman Sea in Australia, meanwhile, the nation’s Tax Office is already onto the third version of its Bitcoin tax advice.
Some Kiwi institutions have at least addressed the crypto issue.
In an analytical note published in November of last year, the country’s central bank, the Reserve Bank of New Zealand, publicly labelled cryptocurrency “not-so-funny moneys”.
The country’s Financial Markets Authority has also released some information on its position.
“Most online exchanges are unregulated and operate exclusively online, with no connection to New Zealand”, it said in 2017.
“This means it is hard to find out who is offering, exchanging, buying or selling. It also makes it unlikely investors will recover their money if things go wrong.”