Detecting a crypto Ponzi scheme, calling the police for caution

Police investigated a fake company running an offshore crypto investment scheme after several people fell victim to the scam.

Detective Sergeant James Robson of the Auckland City Financial Crimes Unit said police had received information about a company calling itself Quwiex Limited.

He claimed that it can offer investors high daily returns.

“This company was registered in New Zealand in late September 2021 with information that has now been proven to be fraudulent,” Robson said.

The supposed company director had an address in New Zealand, but Robson said the investigation revealed that the entire company had been tampered with.

“No real connection to New Zealand has been identified, which means that the people involved in this scam are overseas.”

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

Those who have invested get interest on the basis of their investment and can withdraw the money.

In mid-April, this suspended scheme was withdrawn under the pretext of upgrading the website.

However, the site was disabled on the date the upgrade was supposed to be completed.

Investors’ money is gone.

“The police are aware of the financial distress any of these schemes could cause,” Robson says.

“Unfortunately, since these scam artists are based abroad, the likelihood of making up for their losses is very low.”

Police also warn victims not to deal with anyone offering the possibility of their money being refunded.

Police have identified the Financial Markets Authority (FMA) as a first stop when considering an investment.

The Arab Monetary Fund (AMF) regularly names companies or individuals that investors should be wary of.

Quwiex Limited was reported by the FMA on April 8, noting that “the entity provides financial services without being registered with the Financial Service Providers Register (FSPR) and also makes statements that appear false, misleading and/or baseless.”

An FMA spokesperson told 1News it is constantly issuing warnings about scams targeting New Zealanders.

Some of them operate in New Zealand, and the vast majority of them are abroad.

“There have always been investment scams operating through different ‘storefronts’ – the exciting new thing at the moment is cryptocurrency.

“A lot of them are just a ‘show’ on the internet and are using cryptocurrency to lure you.

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

“You should at least check with the NZ FSPR (Financial Service Providers Register) to see if the company is registered to provide services in New Zealand. This will also give you access to the Dispute Resolution Service.

“meIt is very difficult for us to identify scams because they operate outside the law and we detect when money is lost when people report it. We rely on information from regulators and law enforcement agencies abroad, as well as complaints from the public, so that we can issue warnings quickly,” the spokesperson said.

The FMA says it cannot help offset 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 corporate office managers are.”

Were you a victim of a scam? Email Jane Nixon at [email protected]