Bitcons: cryptocurrency investment scams on the rise
Scams involving Bitcoin, Ethereum and similar currencies are the latest ploys criminals are using to get your cash.
By Nick Gelling
Product test writer
Bogus cryptocurrency is the new go-to hook for financial scammers. They use the perplexing nature of blockchain to trick people into making “investments”.
Only, your money doesn’t go towards buying a gleaming digital coin – it’s simply pocketed. Sometimes, the currency doesn’t even exist.
Crypto scams reported to Cert NZ, a cybersecurity government agency, cost New Zealanders $500,000 from March through June. But that’s likely just the tip of the iceberg, because few victims report their losses.
In its latest quarterly report, Cert warns that cryptocurrencies are high risk and highly volatile – investment opportunities offering high, guaranteed returns are likely too good to be true.
While scams come in many forms, those that take hold here often operate within communities, spreading through real-world networks such as churches.
The multibillion-dollar OneCoin pyramid scheme, for example, ran from 2014 to 2019. Victims around the world, including New Zealand, were duped into believing they were making huge profits through a new currency. It turned out, OneCoin was never actually traded and couldn’t be used to buy anything. It was a multi-level marketing scheme, meaning early victims unwittingly helped to fleece their friends and family before realising they were out of pocket.
The Financial Markets Authority (FMA) received 158 complaints about investment scams and fraud in the first half of 2021, up from 88 in the same period in 2020.
FMA investor capability manager Gillian Boyes isn’t surprised criminals have latched on to cryptocurrency.
“Scammers try to align their pitch with whatever is a ‘hot’ investment, so crypto is often used as the bait. Cryptocurrencies aren’t regulated in New Zealand, so if anything goes wrong it can be hard to get your money back,” Boyes said.
“Don’t assume something is safe just because a friend recommends it, or it pops up on social media.”
Netsafe senior marketing and communications manager Angela Boundy said some messages aren’t even from who they appear.
“Netsafe is seeing an increase in the reports of social profiles being hacked or socially engineered and then used to convince the friends, family or followers of that account to invest.”
Boundy said her organisation has seen a spike in cryptocurrency scams.
“We’ve received nearly 400 crypto-related scam reports in the past 12 months, which is a significant increase when compared to the previous year.”
The latest episode of our Consume This podcast focuses on Rachel, a tax accountant from Auckland. She was tricked into losing $100,000 on fake Bitcoin investments via an elaborate romance scam.
“It was a new thing for me. I met this person and he knows about cryptocurrency, it was a good opportunity to learn about it,” Rachel said. “I couldn’t see any way that he was scamming me. My money was in my account, under my name. How could he scam me?”
Listen to Rachel’s story below.
How to avoid scams
Any investment opportunity received from somebody you don’t know is
suspicious. If you do know the person, but the behaviour seems out of character, try contacting the sender via another channel to check.
Investment offers from people you’ve never been in contact with are
unlikely to be genuine. It’s illegal to send an unsolicited marketing email in New Zealand.
It’s a red flag to be asked to make a transfer through a foreign
bank, wire service, or into a bank account with a name you don’t
Before handing over any money, ask someone you trust whether the
investment sounds above board. Make sure they have no connection to
If you want to invest in cryptocurrency, use a New Zealand-based platform on the Financial Service Providers Register. It won't give you much protection, but it's better than trading with an overseas company.
It’s not just crypto
A text message scam is currently spreading through New Zealand by preying on the fact that we’re shopping online more than ever. The message claims to be from a courier but, if you follow a link in the message, an app is installed to your phone that can steal your information, including passwords.
Named FluBot, this malware then attempts to “infect” your friends by harvesting their phone numbers from your contacts and pulling the same trick.
The FluBot text messages are changing over time to keep people guessing. For example, a recent message suggests you have a voicemail, rather than a parcel.
Never click a link in a text message unless you’re confident of the source.
Have you been the target of a digital scam? Contact me at firstname.lastname@example.org so we can use your story to protect others. You can choose to remain anonymous, and I promise I won’t try to sell you Dogecoin.