New Zealand’s Financial Markets Authority Warns Crypto Investors to Watch Out for Scams
New Zealand’s Financial Markets Authority (FMA) has become the latest financial watchdog to issue cryptocurrency risk warnings to crypto holders and investors.
The warning is coming as the crypto market is witnessing a gradual contraction in market prices. The financial watchdog has warned citizens dealing with crypto assets to be wary of the risks since digital assets are not regulated in the country. FMA stated,
“Cryptocurrencies are not regulated in New Zealand and are often exploited by scammers and hackers.”
A rise in crypto scams
Based on NZ Herald's report, the FMA has expressed worries about the increasing cryptocurrency scams in New Zealand, with several unregulated digital exchanges promising unusually high returns that are unrealistic.
This latest announcement from the FMA is coming barely 24 hours after the UK's Financial Conduct Authority (FCA) issued a warning about the risk of cryptocurrency investments in the country.
Highly volatile market
The watchdog added that New Zealanders looking to invest in Bitcoin and cryptocurrencies should be very careful because they are highly volatile and risky investment vehicles.
The FMA said it shares the FCA concerns, and crypto holders and investors should be prepared to lose all their invested funds if they continue in the highly volatile crypto market.
Many cryptocurrency exchanges based overseas are not regulated, as they carry out their business exclusively online. As a result, investors of such exchanges are at high risk of losing their entire investments if something goes wrong in the market. The FMA noted that there is no assurance that their funds will be safe since it's difficult to find out who is selling, buying, exchanging, or offering the cryptocurrencies.
In the past year, the crypto market has risen substantially, as almost all the digital assets added considerable gains. Now the overall market cap of crypto assets stands at over $1 trillion, with Bitcoin having about 70% of the share.
In 2020, the world’s most valuable cryptocurrency rose by more than 300%. But with the rise in the value of cryptocurrencies, more people became interested in the crypto market. As a result, crypto scams more than doubled as well.
Elliptic, a crypto assets risk management provider, reported recently that threat actors are hiding stolen Bitcoin in privacy wallets. Some criminals are also using pictures and details of famous people to deceive crypto holders on fake news websites.
The threat actors have used scam Bitcoin ads featuring unauthorized pictures of celebrities and personalities like Waleed Aly, Chris Hemsworth, and Andrew Forest to lure their victims to part ways with their cryptocurrencies. The report revealed that these cybercrimes are linked to threat groups from Moscow.
Verifying registration status of the exchange
New Zealand’s watchdog has also issued an advisory to crypto investors who deal with crypto exchanges. According to the regulator, users should verify whether the exchange holds their New Zealand dollars in a trust account. They should also ensure that the exchange is dully registered with the Financial Service Providers Register (FSPR), which is required in the case of a dispute resolution.