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.

IMF Predicts Stablecoins Will Challenge Cash and Bank Deposits

Samuel Haig

The International Monetary Fund (IMF) has published a paper that launches a new series of work seeking to “provide insight into the intersection of technology and the global economy.”

The paper, titled, 'The Rise of Digital Money,' was authored by Tobias Adrian and Tommaso Mancini Griffoli, and seeks to examine the challenges that electronic forms of money pose to legacy financial institutions and regulators.

IMF Argues Stablecoins Are Less Risky Than Cryptocurrencies

The authors anticipate that cash and bank deposits - “the two most common forms of money” - will “face tough competition and could even be surpassed” by emerging electronic monetary commodities, such as stablecoins.

The paper asserts that stablecoins are more likely to challenge existing payment systems than traditional cryptocurrencies, arguing that speculative cryptocurrencies are “by far” riskier - with Bitcoin (BTC) producing averages daily price fluctuations approximately 10 times higher “than in most G7 currency pairs, and even a little higher than in the Venezuelan Bolivar to U.S. dollar exchange rate.”

Issuer Credibility and Underlying Asset Volatility Among Issues Brought By Stablecoins

While the paper emphasizes the advantages stablecoins offer over traditional monetary forms, such as fast and frictionless payments, and reduced price volatility when compared to speculative crypto assets, the IMF expresses concerns pertaining to fundamentals underpinning stablecoins.

The authors warn that stablecoins: “use some variation of a simple system to stabilize value, which is not always credible,” adding that while other cryptocurrencies are “akin to a floating exchange rate,” managed stablecoins “resemble managed exchange rates.”

“However, we know too well the common fate of pegs. When a country’s economic fundamentals are off-kilter, the central bank can run out of the foreign exchange reserves needed to purchase domestic currency in the marketplace. Providers of managed coins can also run out of assets to support the price of their coins, especially because they may stand on shaky fundamentals—use determining value, and value encouraging use.”

 

IMF Advocates Active Regulatory Role for Central Banks

The paper emphasizes “important role” central banks will play in guiding the trajectory and forms of digital monetary commodities through regulatory measures.

The authors suggest that “One solution is to offer selected new e-money providers access to central bank reserves, though under strict conditions,” adding: “Doing so raises risks, but it also has various advantages. Not least, central banks in some countries could partner with e-money providers to effectively provide ‘central bank digital currency (CBDC)’, a digital version of cash.”

However, the paper advocates an alternative public-private model, called the “synthetic CBDC (sCDBC).” The sCBDC system would see central banks offer settlement services to virtual money providers, including access to central bank reserves, however, “all other functions would be the responsibility of private e-money providers under regulation.”