Unable to step into a regulatory grey area, New Zealand’s watchdogs rely on the media to spread a message of caution
Regulators had limited power to stop a cryptocurrency firm flagged as a potential ponzi and pyramid scheme from carrying out a seminar in Christchurch last night.
WEWE Global, which describes itself as “The Crypto Multi-service Platform” and apparently offers a cloud minting service, says its main selling point is a referral bonus, with users able to receive daily commissions from community members.
As pointed out by David Farrier’s Webworm newsletter earlier this month, it sounds a lot like a multilevel marketing scheme.
In a warning issued yesterday morning, the Financial Markets Authority said WEWE and associated company LYOPAY were offering crypto currency products and service via webinars and public events in New Zealand but were not registered on the Financial Service Providers Register as required by law.
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It recommended exercising caution when dealing with the entities and listed a series of website domains they operated under.
Ticket sales to the conference weren’t available through Eventbrite yesterday, but were previously advertised as costing between AUS$10 and $20.
A call to Novotel Christchurch Airport (the venue for WEWE’s New Zealand visit yesterday afternoon) confirmed the conference was going ahead.
WEWE’s Eventbrite profile shows it had previously carried seminars in New Zealand and that last night’s visit was part of a February 4 to February 15 Oceania Tour, which included stops in Australia.
It had previously carried out (or at least advertised) an event in Auckland in December 2022.
The event
Headlined by WEWE’s Presidential Ambassador & Global Master Distributor Diego Endrizzi, the description for the event lent heavily on hard to understand crypto-speak and the underlying investment product is unclear.
It actively targeted desperate individuals.
“We live during challenging times with tough economic conditions. Many people are fighting for survival with rising inflation, high interest rates, rising food costs and other essentials and need a ‘solution’ that works for them. Are you struggling financially, dissatisfied with you [sic] current situation, looking for a way out, a way forward?,” its Eventbrite page said.
Commerce Commission fair trading general manager Vanessa Horne said it was aware of WeWe Global and allegations made against it but it was yet to engage with it.
“We are currently assessing the information received, to decide whether to open an investigation and what compliance and enforcement options that may be available,” Horne said.
“Our assessment looks at the nature of allegations and whether they potentially raise a concern under the Fair Trading Act.”
Any engagement with the business would only happen if an investigation was opened.
The Serious Fraud Office had lodged a complaint with the Financial Markets Authority (FMA), which regulates the offering of financial advice in New Zealand, leading to the warning notice.
If the FMA is concerned enough about the event to issue a public press release saying it is a potential scam, why hasn’t it stopped the event going ahead?
Cryptocurrency is a shady area for the authority as it isn’t regulated in New Zealand, though any New Zealand-based trading platforms must be registered financial service providers.
Because crypto isn’t a recognised financial product, any regulator, be it the Serious Fraud Office, the Commerce Commission or the FMA, will find it difficult to intervene until a crime has actually been committed.
The FMA also doesn’t have the power to regulate physical events.
When it comes to potential pyramid schemes sitting in a regulatory grey zone, New Zealand’s watchdog must instead rely on the media spreading a message of caution.
