New Zealand’s Financial Markets Authority (FMA) and the National Reserve Bank of Tonga are warning investors about a Ponzi-style investment scam circulating in both countries.

The scam, currently known as BG Wealth/DSJ EX, is part of a wider Ponzi-style investment scam known as TXEX which uses multi-level marketing (MLM)-type recruitment tactics. The FMA’s warning currently lists 813 websites and 30 entities which have been linked to this investment scam as they were found to be duplicates.

The scammers start by inviting people into investment groups on social media platforms including WhatsApp, Viber and Bon Chat. The groups are often led by a professor and his assistant, they promise 100 percent returns and encourage victims to recruit their friends and family into the scam.

Once in the group, victims are told to open a cryptocurrency exchange account and load it with funds from their bank. The scammers then tell them to transfer their cryptocurrency into a so-called trading account on a fake app. The app contains malware, creating risk of further harm.

People may not be aware that this is a scam as they can initially make a few trades, so the platform feels authentic. Early recruits are even able to make small withdrawals which builds trust and encourages them to recruit others. But when they try to withdraw their full funds, they are told they need to pay a fee to release the money. Even if they pay the fee, they will not get their money back. As with other Ponzi schemes, once recruitment slows, all users are locked out of their accounts and the scammers disappear.

National Reserve Bank of Tonga Governor Tatafu Moeaki says:

“We recommend extreme caution around this investment scam. If you know family members, friends especially people in in Tongan communities both in Tongan and New Zealand already involved, please share our warnings with them immediately. This scam often promises fast and easy payouts but there are no guaranteed quick pay outs, only high risks of loss”

“We encourage people to take extra care when making investment decisions and seeking out investment advice. Be very cautious if anyone or organisation offering investment opportunities through social media platforms. Report any suspicious activity without delay to the FMA or the Reserve Bank of Tonga.

“By raising awareness of these scam methods and encouraging investors to stop and think carefully before making investment decisions that might be driven by a scam, we hope to protect our communities from harm,” says Moeaki.