Students raising awareness after teacher loses thousands in cryptocurrency scam

Investment scams have risen since last year.
Investment scams have risen since last year. Photo credit: Getty Images

A Tauranga school class wants to raise awareness of investment scams after their teacher was scammed over $5000 by a fake cryptocurrency trading site. 

According to Netsafe investment scams have risen since last year, as scammers prey on people wanting to enter the crypto world.

Deon Wessels is a superannuate who was looking at ways to help fund his eventual retirement. He had signed up with a local expert to attend a crypto-trading course and was doing some pre-training research when he made what he subsequently learned later was a big mistake.

Wessel entered his phone number during his research and got a message from a "fellow crypto novice" on Whatsapp, who convinced him to give the site Earning Field a shot and invest a small amount to gain confidence in trading.

He bought cryptocurrency from a legitimate dealer and then transferred the crypto from the dealer's wallet to Earning Field, in the process of doing so he severed links with any traceable money transfer.

Earning Field claims to be the best investment plan of 2018, with plans users invest into that vary in percentage earnings based on how much you invest, with the most expensive earning claiming to give a 30 percent return.

Wessel first invested US$100. He received a 15 percent return after 24 hours and was able to withdraw the full amount of money. 

However, things took a turn when the Whatsapp user convinced him to invest in the more expensive plans.

When Wessel tried to withdraw his money from the plan he was told he had to invest US$1000 every week for six weeks as part of additional conditions he wasn't told about and if he wanted to pull out he could buy out of the plan with half of the total investment.

When Wessel tried to buy out of the investment he was told to invest into another plan because their system "could not deal with the change" and then was asked to provide multiple additional payments to the company.

"Stupid me again transferred money in the hope of getting out," he said.

Alarm bells started to ring for Wessel and he realised he had lost over NZ$5000 that he wouldn't get back.

"In hindsight, there were so many warning bells that should have stopped me from the word go."

He went to his electronics class at Otumoetai College after being frustrated at the company and one of the students who knew a lot about cryptocurrency looked at the website and told him it was a scam.

Wessel said there were signs the class found that it was a scam including the company registration was fake and no physical or email addresses are shown, but when searched online the company has great reviews.

Wessel hasn't been able to get his money back, as his bank told him they have no responsibility for what I do with the money after it has reached a legitimate destination. 

"Bottom line, if you suspect something is off, bailout immediately - don't dig in deeper because the losses only grow as they are professionals," he says.

One of his students Logan Roelofs says despite being an electronics teacher Wessels was not an expert when it comes to the internet, making him the " ideal target" for scammers.

"Especially with cryptocurrency scams it's happening a lot more now that more people are hearing about it and heaps of older people and people that aren't so familiar with the internet don't really know what it is," Roelofs said. 

"All they hear is it is a good place to invest money, but without know actually how it works people are profiting off them."

Netsafe said in a statement to Newshub that reports of investment scams for the first quarter of this year (January to March) increased by 13 percent in comparison to the same time last year.

A Netsafe spokesperson said investment scams cover a range of situations where people are tricked into sending money with the promise of receiving more in return.

The non-profit online safety organisation said cryptocurrency transactions can not be reversed and the only way to get the money back is if the recipient chooses to send it back to you, which scammers will not.

"Cryptocurrency transfers are tracked across a decentralised ledger, many ‘nodes’ across the network will confirm the transaction to the blockchain," a Netsafe spokesperson said. "As there is no single person or entity that maintains this record of the transaction, this means that there is essentially no method of having the payment reversed."

Netsafe urges people to know who you are sending cryptocurrency to and to only buy cryptocurrencies from trusted sources that have a strong record of delivering their service to avoid being scammed.

The organisation also said it is safest to hold cryptocurrencies in your own wallet. 

When you first buy cryptocurrency from an exchange it is held in your exchanges account, but technically the cryptocurrency will still be held by an exchange company on the blockchain.

 "It’s safest to transfer these funds to your own private wallet so that ownership and access to your cryptocurrency is with you alone," Netsafe said.

Wessel says his advice for investors is "if it is too good to be true, it definitely is". 

He says for people wanting to start out in crypto investments it is a good idea to first attend training sessions from reputable experts to understand the intricacies of crypto investment and to never invest money you can't afford to lose.

Earning Field has not responded to Newshub's comment requests.