An increasing number of Zambians are still being duped into investing in cryptocurrencies, a popular virtual currency, where citizens are promised massive proceeds from their investments but fail to yield returns, says the Bank of Zambia (BoZ).
Speaking during official opening of the Conference of Western Attorney General Africa Alliance Partnership (CWAG AAP) Workshop on Virtual Currency Investigations, BoZ deputy governor for operations Dr Bwalya Ng’andu told stakeholders that a rising number of Zambians were getting caught up in investing in cryptocurrencies as a vehicle to yield higher returns, but failed to deliver on investments made.
“The BoZ has observed a rapid rise in scams that are being perpetrated by fraudsters in the name of cryptocurrencies. In a number of such frauds that the BoZ has dealt with in partnership with the Zambia Police, the Drug and Enforcement Commission and the Financial Intelligent Centre (FIC), investors were promised returns on their investment in some cases calculated on the basis of 1.5 per cent per day or a promise to triple their investment within one month,” Dr Ng’andu disclosed in Lusaka, Monday.
“The unfortunate thing is that these schemes have been rapidly subscribed to; the catch being that their money will be invested in cryptocurrencies. Since the dynamics of these currencies are largely unknown, these investors are easily lured by what Economist Joseph Stiglitz calls ‘techno mysticism’ and for this reason investors feel no obligation to enquire into the underlying economic activity that would generate such returns and, therefore, give them the comfort that they have made a prudent investment decision.”
He noted that criminals were usually quicker to understand how to defraud unsuspecting members of the general public using the latest innovative technologies like the cryptocurrency.
“For regulators and law enforcement officers, the development that the cryptocurrency technology can facilitate organised crime is disconcerting because more often than not criminals are quicker on the uptake and tend to understand the way that they can use innovative products and services to defraud unsuspecting users. Sometimes, they do this long before the capacity and capability to regulate or police is built. The fact that this happens should not necessarily be an indictment on the likes of us who are in this room,” he said.
“It is just that technology is now introducing new products and services in the market at such a furious pace that regulations and laws, sometimes lag behind and we have to play catch a up game with the law-breaker. In this technologically fast changing environment, it has become imperative for law enforcement agencies (regulators, investigators, enforcers, and prosecutors) to deliberately and constantly refresh their knowledge so that they are better placed to respond to the challenges that innovation throws at them.”
He further noted that there was need for all sections of society to enhance their knowledge on the relevance of new technologies, such as the cryptocurrency.
“Ignorance surrounding cryptocurrency, unfortunately, is not the special preserve of the general public because it finds its place even among those of us who are charged with the responsibility of regulating the financial landscape or fighting crime, which may have its origins in the use or misuse of virtual currencies. We hope that for the law enforcement officers and regulators among us, this workshop will enhance our practical and theoretical knowledge of virtual currencies,” said Dr Ng’andu.