New Zealand Issues Warning About Three Cryptocurrency-Related Scams

  • New Zealand’s Financial Markets Authority has added three “suspected scams” to their Warnings & Alerts list.
  • Cryptogain, Russ Horn, and Zend Trade are the companies in question that the government wants citizens to stay away from.

Earlier today, New Zealand’s Financial Markets Authority (FMA) added three new companies to its list of “suspected scams.” The three companies are Zend Trade, Cryptogain, and Russ Horn (also known as Forex Equinox). These three companies have been added to the New Zealand FMA’s “Warnings & Alerts” list. This list is an ongoing effort by the New Zealand government to help investors avoid putting their money into the hands of questionable people.

The three companies were labeled as “Suspected Scams,” which means: “We think the operations of the business/person bear the hallmarks of a scam. We strongly recommend that you do not deal with them.” The full list of warnings & alerts can be found here.

CryptoGain appears to be a scam similar to BitConnect, promising daily returns for their investors. On their website, CryptoGainLimited.com, they offer up to 2.6% daily returns for people who invest in their company. Additionally, they offer cloud mining packages (with 30% weekly returns) and a retirement plan (giving “30% profit after retirement”). Such sky-high returns will set off alarms for many investors, as well as their cloud mining offering, which is currently considered an unregistered security in the United States.

In addition, the FMA has identified that CryptoGain is possibly posing as a fake company. There is a company filed as CryptoGainLimited, but it is not related to the company described above. Therefore, the FMA believes this is likely not legitimate.

The other companies - Russ Horn, Forex Equinox, and Zend Trade - are all suspected to be organized under Russ Horn’s leadership. RussHorn.com and ForexEquinox are not scams in the sense that they will take your money - they seem to simply be exaggerated marketing pitches for Russ’ forex trading system.

His website offers a “free plus shipping” book. Although not a scam in the sense of failed project BitConnect, Russ Horn’s website does include some outlandish claims, including “How To Legally Cheat The Forex Markets And Literally Line Your Pockets With Cash.”

ForexEquinox.com claims that his system can “double your money every 30 days.”

Ongoing Suspicions

Zend Trade has been suspected of being a scam after it was found that Zend is not returning clients funds. Unlike ForexEquinox, which teaches people how to trade, ZendTrade offers “Managed Account Services.” This service means that ZendTrade will hold clients' money and trade for them, which could put them under regulatory scrutiny, since this service sounds much more like a hedge fund. FMA claims that this company is connected to Russ Horn.

BBC: Facebook Planning to Launch ‘GlobalCoin’ in Q1 2020

Siamak Masnavi

Social networking giant Facebook is planning to launch its own cryptocurrency (internally dubbed "GlobalCoin") and crypto-powered global payments network (internally called "Project Libra") worldwide by Q1 2020, according to a report published earlier today by BBC News, the world's largest broadcast news organization.

Project Libra's Origin Story

  • 8 May 2018: In a post on Facebook, David Marcus, the former head of Messenger, who was at that time also a board member (since December 2017) of crypto exchange Coinbase, revealed that he was leaving that role to set up a new group focused on exploring applications of blockchain technology across the whole of Facebook.
  • 13 December 2018: Cheddar reported that Facebook’s blockchain group is planning to "potentially disrupt the entire payments industry":

"At a private dinner Facebook hosted during a recent crypto conference, one attendee told Cheddar that Facebook employees pitched the idea of creating a decentralized digital currency for the social network’s 2 billion users."

  • 21 December 2018: Bloomberg reported that Facebook was creating its own cryptocurrency (a stablecoin) for money transfers within its highly popular messaging app WhatsApp.
  • 28 February 2019: The New York Times confirmed Bloomberg's earlier story, and said that, according to its sources, this project was "far enough along that the social networking giant has held conversations with cryptocurrency exchanges about selling the Facebook coin to consumers."
  • 8 April 2019: Nathaniel Popper, one of the two journalists who wrote the report in the New York Times, provided this update (on Twitter) about Facebook's cryptocurrency project:
  • 2 May 2019: The Wall Street Journal reported that Facebook was "recruiting dozens of financial firms and online merchants to help launch a cryptocurrency-based payments system," and that the core part of this initiative (code-named "Project Libra") is "a digital coin that its users could send to each other and use to make purchases both on Facebook and across the internet." Furthermore, this report said that, according to people familiar, Facebook was talking to "financial institutions including Visa Inc., Mastercard Inc. and payment processor First Data Corp." about investing in this project.
  • 17 May 2019: A report by Reuters said that FinTech company Libra Network was registered in the Republic and Canton of Geneva on May 2. Looking at the entry for Libra Networks, which was published on May 7 in the Swiss Official Gazettte of Commerce (SOGC), tells us:
    • Libra Networks LLC (registration number: CHE193533388) has its registered office in Geneva.
    • According to the English translation, the stated purpose of this company is "provision of services in the fields of finance and technology, as well as the development and production of related software and infrastructure, particularly in connection with investment activities, the payment operation, the financing, identity management, data analysis, big data, blockchain and other technologies."
    • The share capital is CHF 20,000 (100 shares, each with a nominal value of CHF 200); all of the shares are owned by Facebook Global Holdings II, LLC.

Facebook's Stablecoin: GlobalCoin

Here is what we have learnt from the BBC News report:

  • Facebook "is planning to set up a digital payments system in about a dozen countries by the first quarter of 2020."
  • The plan is to start testing the new cryptocurrency (some kind of stablecoin), GlobalCoin, by the end of 2019.
  • Facebook has been getting "advice on operational and regulatory issues" from the UK's central bank governor Mark Carney (whom Facebook founder and CEO Mark Zuckerberg reportedly met in April) and from U.S. Treasury officials.
  • Facebook is also in talks with global remittance firms such as Western Union "as it looks for cheaper and faster ways for people without a bank account to send and receive money."

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