ONE of the fundamental reasons Fijian citizens are skeptical of being involved with cryptocurrency is the risk of being scammed. Usually, these scams take place on social media such as Instagram, Facebook and Tiktok.
The director of the Fiji Financial Intelligence Unit (FIU) adds to this skepticism as he warns members of the public to exercise extreme caution and not engage in any cryptocurrency trade or multilevel marketing/pyramid schemes.
Tropik Wood Industries Limited employee Nathaniel Kumar, 24, was approached by a suspicious character’ via Instagram recently, who offered to increase a prior Bitcoin investment 10 times over. But there was a catch.
“This could only happen if I had paid $250 right off the bat.I thought it was going to be easy money, but it sounded too good to be true,” Mr Kumar recalled.
“I did not invest in that because I had friends and family members who had sent money overseas for similar scams without ever getting it back. Many others were not so fortunate.”
Although investing in cryptocurrency has been the latest trend, Mr Kumar was not aware that the Consumer Council of Fiji had issued a statement warning consumers that investing in any cryptocurrency was illegal in Fiji.
According to Chainanalysis Crypto Crime Report: 2022, cryptocurrency-based crimes hit a new all-time high in 2021, with illicit addresses receiving $14 billion over the course of the year, up from $7.8b in 2020.
The report claimed that criminal abuse of cryptocurrency created huge impediments for continued adoption, heightened the likelihood of restrictions being imposed by governments, and worst of all victimised innocent people around the world.
The rapid increase in criminal activity was due to a single scammer, Edvard Sabirov, who had swindled about $95 million from investors in Russia. Sabirov created a pseudo investment fund in 2021 called Finiko and encouraged people in Europe to get involved with cryptocurrency; investors had done so readily under the assumption that it was a legitimate fund.
This was not in fact a legitimate account but a form of a Ponzi scheme. Sabirov promised high returns on investments while ensuring low risks. Yet no investor ever received any return on capital. He was later arrested in the United Arab Emirates.
This bears similarity to the pyramid scheme circulating in Fiji around the same time period. This was where new investor funds were being used to pay older investors.
The newer members tried to entice other members to join in for them to receive the same benefits. In September 2022, Fiji’s Financial Intelligence Unit (FIU) advised the public of a cryptocurrency scam that was circulating on instant messaging apps such as Viber.
“These scammers have circulated advertisements on various viber and social media groups using the official logo of a government agency and staff photo. These advertisements are fake,” said FIU director Razim Buksh.
“The fake advertisements state that individuals in Fiji can purchase bitcoin, foreign exchange and binary trading using their mobile money wallets or bank transfers.”
He said those wishing to engage in offshore investments, including trading of cryptocurrency or other virtual assets must obtain approval from the Reserve Bank of Fiji.
However, he said, the offshore investment facility was suspended, thus contravening the Exchange Control Act if one engaged in any unauthorised offshore investment.
Several concerns about cryptocurrency also prompted the Fijian Competition and Consumer Commission to issue warnings to Fijians not to get involved in cryptocurrency without first understanding the market.
Jonathan Kumar is a final-year journalism student at The University of the South Pacific’s Laucala Campus, Suva, Fiji. He is also a reporter for Wansolwara, USP Journalism’s student training newspaper and online publication.