Case Study for Crypto Investment Scheme Scams

Nowadays, investments in cryptocurrency are becoming more and more appealing. As a fellow investor, it’s important to identify which investment opportunities are legitimate, and which ones present potential crypto scams. Follow along as we look into Tash and her experience encountering a crypto investment scheme.

Tash received an email advertisement about an investment opportunity that is now available for New Zealand customers.

The email had asked all of those who are interested to “register” their expression of interest. Three days later, Tash received a phone call from an investment firm following up on her expressed interest.

The accounts manager over the phone told Tash about how this investment was a once in a lifetime opportunity and referred to the amazing growth within the cryptocurrency markets in recent months.

Tash had heard a thing or two about cryptocurrencies over the radio recently and was convinced by the account manager.

Case study

Continuing from Tash’s scenario prefaced above.

“To get you on board, you will need to set up an account with a cryptocurrency retailer so that you can deposit your Bitcoin into an account we have set up for you,” the account manager said. 

“You’ve got only 72 hours to capitalise on this opportunity” He added.

“But I don’t even know what to do with this account” Tash replied.

The account manager assured her that they have a specialist tech team that can walk her through.

“One moment, while I get Bob, our tech support will help you. I’ll transfer you through to him”.

Tash didn’t give much thought to that, and felt they sounded like any other legitimate company.

“Hi Tash, my name is Bob and i’m here to help you through this process so that you can set up your cryptocurrency account to make the transfer into your crypto investment account. I have just emailed you a crypto investment account which you can deposit your Bitcoin address to”.

An email with a string of numbers and an alphabet came through.

“Now, go onto www.blockchain.com. Enter your address into the top search bar. You see how the account is all set up and only to you? It’s also anonymous so your privacy is safe.” Bob explained.

“Your account manager said you don’t know how to buy Bitcoin and to deposit into your investment account? Oh well, we don’t have much time before this offer runs out. I’ll help you to get your sorted today alright?”

Tash, not really not knowing what is going on went along: “Yes please help me through this”.

“Well madam, i’m sending you an email request. Once you see that, tell me what’s the code that appears so that I can remotely help you with this”.

Tash followed Bob’s instruction and granted his remote control. Bob was quick and confident in his online presence and directed to Easy Crypto’s website to set up an account. 

He walked her through how to verify her account and how to respond to Easy Crypto’s helpdesk team. Tash thought “ah, he’s so familiar with this process, he must know what he’s doing”.

Unfortunately, it turned out that these guys were scammers trying to take advantage of Tash’s unfamiliarity with crypto to get their hands on her hard earned money. In actual fact, the address they were telling her to send to was only controlled by the scammers.

Thankfully in Tash’s case, our compliance team picked up the red flag and placed a block on Tash’s account to ensure that no cryptocurrency was transferred out to this address.

Tash is not alone. According to the Financial Markets Authority (FMA), the most common investment scam that people had been approached about was cryptocurrency. Almost one in two scam victims are approached about cryptocurrency-related scams (47%). 

Warning signs of potential crypto scams

Through Tash’s story, we can learn about the warning signs of a potential crypto scam:

1. These “companies” contact you out of the blue. This could be through a cold call, text, message on social media, email, or brochure.

Keep in mind – it’s illegal to cold call for selling financial services or products in New Zealand.

2. They pressure you into making a rushed decision. This could be with a limited time offer, bonus or discount if you sign up before a deadline.

3. They call or email you repeatedly or that they try to keep you on the line for as long as possible. This is to try to keep you engaged so they can pressure you to make a rushed decision.

4. It seems too good to be true. They typically downplay the risks but claim that the investment has a high return.

5. They may ask you to keep the investment quiet because there are “only limited spaces”. The scammer might tell you the investment opportunity is just for you and ask you not to tell anyone.

6. They’re not registered on the Financial Markets Authority website.  In New Zealand, a firm must be authorized and regulated by the FMA to do most financial services activities. See if they’re registered with the FMA.

People from all walks of life have fallen victim to crypto scams, losing assets that they can’t afford to lose. The people behind such scams can be extremely convincing, don’t think it will not happen to you.

As the good old saying goes: if something seems too good to be true, guess what? It is.

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