Man fails to recover $15k lost in scam

An investor who lost $15,000 of bitcoin in a cryptocurrency scam is a reminder that scammers can strike in many ways, a financial dispute resolution scheme says.

The man complained to Financial Services Complaints Ltd (FSCL) when he could not get a refund. He had used an exchange platform to buy cryptocurrency to invest in a ‘‘guaranteed returns’’ scheme.

While the platform had warned him that there were risks, he continued to invest and went on to lose $15,000.

FSCL said signs that the ‘‘investment’’ was a scam included the fact that it offered guaranteed returns, a photo on the company’s website purporting to be the chief executive that appeared to be someone else, and the fact the investment scheme’s incorporation certificate was from a country in the Caribbean, although it claimed to be a United States company.

However, chief executive Susan Taylor said it also used common scam methods to hook people, such as paying a small return initially to encourage further investment.

‘‘They’re very clever, the way they suck people in. You invest some and get a bit of return so you think this is great and go on and invest more, then the money disappears.’’

She said although the exchange platform had set out concerns to the man at the time, the investor had not wanted to accept the truth. It was only when he had lost all of his investment and asked the exchange platform to refund him $15,000 for the bitcoin he had invested, that he understood the exchange platform was not liable for the loss.

He believed that the exchange platform should not have authorised his transactions and argued that the platform had a responsibility to verify the merchants their customers paid bitcoin to.

The exchange platform said it had no responsibility over what customers did with their bitcoin after buying it and had made reasonable attempts to warn the man about the scheme.

‘‘The exchange platform had complied with their obligations to ensure their messaging about the risks and rewards of buying crypto assets were balanced, and they had pointed out the risk . . . We were satisfied that the exchange platform had not engaged in deceptive conduct,’’ Taylor said.

The exchange platform now does not bring on new customers who mention managed investment schemes unless the schemes are regulated in a safe environment or officially vetted.