A cryptocurrency expert is warning people if an investment opportunity looks too good to be true, it might be a scam.
This comes as the Commerce Commission has issued a ‘Stop Now’ letter to Shelly Cullen, a promoter of Lion’s Share – a suspected pyramid scheme.
Lions Share encourages people to pay hundreds of dollars to join the scheme, in the hopes of being rewarded in cryptocurrencies from each new person they sign up.
On receiving the letter, Cullen told the Commission she had stopped promoting the scheme.
Janine Grainger, a bitcoin and cryptocurrency retailer, said that while this type of scheme had always been around, cryptocurrency was providing a new vehicle for them to take place.
“Most of this will spread through word of mouth and network marketing, so it seems to work very strongly within particular communities,” she said. “The work Shelley’s been doing is a really good example of that, the large number of followers she has on Facebook, people getting their friends and whānau to sign up and join in and it moves by that network effect.”
Grainger said Lion Share lacked genuine value creation or sales of a product or service.
“The money that is in the system and the money that you get from being in the system is purely funds put in by new recruits.”
She said people should watch out for investment opportunities that land in their lap and seemed too good to be true.
This could include a cold call or email inviting someone to join a scheme, or an article about a celebrity making a lot of money.
“In my experience, most scam investments will come looking for you,” she said. “Those sorts of things are scams, whereas a really good investment, you need to go out and do your research to find it.”