A cryptocurrency analyst is advising people that if an investment offer looks too good to be real, it could be a fraud.
This is because the Commerce Commission has released a ‘Stop Now’ letter to Shelly Cullen, the founder of Lion’s Share-a alleged pyramid scheme.
Lions Share invites individuals to spend hundreds of dollars to join the program, hoping that any single user they sign up for will be paid in cryptocurrencies.
Upon receipt of the letter, Cullen told the Commission that she had stopped supporting the scheme.
Janine Grainger, a bitcoin and cryptocurrency merchant, said that while this sort of scheme has already been around, cryptocurrency has provided a new vehicle for it 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, a 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 were expected to look out for investment opportunities that fall in their lap which looked too amazing to be true.
This could involve a cold call or email asking someone to join a scheme, or a story about a star-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.”
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