New Zealand's Financial Markets Authority (FMA) has been active in combating fraudulent activity and scams in the country's financial markets. In a series of recent actions, the regulator has taken steps to protect consumers and uphold market integrity by revoking a crowdfunding service license and issuing a warning to a cryptocurrency company.

FMA Cracks Down on Fraudulent Activity and Scams

According to an update on Wednesday, the FMA canceled the crowdfunding Equitise Pty Ltd was an equity crowd0funding service provider licensed since 2014. Equitise was revoked after it committed serious breaches of certain market services licensee obligations and failed to meet statutory requirements.

The company failed to provide financial reports and consent to procedural reporting and was deregistered from the Financial Services Providers Register (FSPR) for failing to submit annual confirmations within the required timeframe.

Peter Taylor, FMA's Head of Professional Oversight and Response, says: “Cancelling a provider's license is one of the strongest regulatory actions we can take and it is not a decision the FMA takes lightly.” He emphasized the seriousness of the action. Providers must ensure they are able to meet the legislative requirements and act lawfully under the rules that are designed to protect consumers and ensure market integrity.”

In another warning, the FMA alerted investors to AxonExchange, a suspected cryptocurrency trading scam. The platform claims to be based in New Zealand, but is not a registered company in that country and is not authorized or registered by the FSPR to provide financial services.

The FMA is concerned that AxonExchange is fraudulent due to investor complaints about difficulties withdrawing funds from the platform.

New Zealand imposters on the rise

New Zealand regulators are concerned about the increase in impostor-related fraud, with a particular emphasis on the increase in false product disclosure statement fraud. In 2023, a total of 82 warnings were issued in relation to suspected investment scams and impostor websites, as well as 22 warnings in relation to unregistered businesses. This marks a significant increase in efforts to alert the public to these deceptions.

In addition, the FMA reported a new trend of scammers posing as another regulator, specifically the UK regulator, the Financial Conduct Authority. These scammers are sending emails to New Zealand residents claiming they can assist in recovering funds lost in previous scams.

According to a report released by the FMA late last year, while the total number of crime warnings decreased from 111 the previous year to 89 in 2023, the number of imposters and impostor websites increased significantly. The report noted that 29 such cases will occur in 2023, a significant increase from previous years, when similar cases were isolated and statistically irrelevant.