Connect with us


Is Forex A Scam Or Money Goals?



Prev1 of 2
Use your ← → (arrow) keys to browse

Currency trading is a vast and technical space, however, many get caught in the seductive web of quick gains. Untangling forex can be daunting but with patience, it can be rewarding.

Foreign exchange, also known as forex (FX), is a trade that has risen in popularity over the last decade on the continent. Many companies and sole proprietors have claimed to have amassed wealth from FX, going as far as offering seminars and flaunting their opulence on online platforms.

However, a number of them have also been exposed as frauds and scammers. This has called into question the validity of FX as a credible investment vehicle, but the semblance of wealth has also continued to attract unsuspecting investors.

Simply put, FX is the market where foreign currencies are traded. It is a vast and mercurial space as currencies from all over the globe participate in this market. The buying and selling of currencies in this decentralized global market is determined by whether markets move up or down and traders make decisions based on these movements.

READ MORE | Cryptocurrency Thefts, Scams Hit $1.7 Billion in 2018: Report

These market conditions influence how traders speculate and make predictions, with the ultimate goal of selling a currency at a higher price than it was purchased for in order to make a profit.

FORBES AFRICA followed the breadcrumbs of an unsettling FX story that has since uncovered a police investigation into a shocking FX scam that spans provinces and allegedly defrauded millions from unsuspecting investors. How easy is it to pose as a forex trader? What steps do investors need to take to ensure their money is the hands of reputable traders?

Forex landscape in Africa

In relation to other markets, the popularity of FX in Africa is relatively new. The first retail forex CFD (contract for difference) on the continent opened its doors in 2017 in Sandton, dubbed the richest square mile in Africa.

This is an indicator that FX had not been previously commercialized on the continent, while globally FX lounges were commonplace. This speaks to the idea that FX is still developing in Africa. It is also an indicator that Africans have shown enough interest in FX for investors to identify a gap in the market and take the risk of trying what others have not previously ventured towards.

Although it has provided investors the golden opportunity of an uncharted territory, it has also created a feeding frenzy for predators looking to exploit a decentralized market that produces an average value of $5 trillion daily trading volume globally.

FX trading occurs digitally, via the internet which is an immeasurably colossal space, with crevices like the deep web that elude the average Googler. Its boundlessness means that it does not fall under any particular jurisdiction and, therefore is not restricted by laws and regulations.

Nick Sproule, retail trader and director of Blackstone Futures. Picture: Motlabana Monnakgotla

Herein lays the first of many obstacles for an unsuspecting investor who hands money over to scammers. Technically, anybody can trade should they choose to do so and this opens the door for reputable traders and shysters alike.

Economist Kathy Nicolaou Manias cautions that “scamming in the digital space is very intense… it’s actually very easy to be scammed but you’ve got to keep your wits about you and be very careful.

“The forex environment is an incredibly volatile one, especially if you’re looking at the rand. It’s different if you’re looking for a retail trader – that’s someone who is an agent who can convert currency for you,” says Manias who is a leading expert on the continent on illicit financial flows, AML/CFT, beneficial ownership and trade-based money laundering.

There has been increasing evidence to show that a significant number of people who invest in FX have a limited understanding of what it entails and inadvertently end up being victims of unscrupulous traders, trainers, brokers, and companies.

The draw to the FX market is that it’s purported to be a space of opulence and lightning-quick extraordinary returns for relatively little work.

Nick Sproule, who is a retail trader and director of Blackstone Futures – which is a forex and CFD company, says his clients are “mom-and-pop clients who are interested in being involved in the financial markets”.

He agrees it’s possible to make large sums of money but says there are a variety of distorted associations with FX.

“You can make excessive profits in a short space of time, based on the amount of capital that you put in… There are a lot of people out there that purport themselves to be mentors, trainers, FX experts that who lure people in with this idea of big wads of cash and create the idea that it’s achievable for everybody.

Typically, there’s a training program that comes with it; they offer free signals, and the reality is that most of these mentors or trainers can’t trade themselves.

Nick Sproule

“They make money charging R20,000 ($1,415) for a course, people part with their money and before you know it, they haven’t learned anything and the mentor has disappeared.”

Manias echoes Sproule’s sentiments in saying there might be a burst of financial incentives from trading but it’s inconsistent and therefore it’s erroneous for traders to perpetuate the idea that FX offers a limitless amount or wealth daily.

“The rand is probably one of the most volatile exchange rates globally. It’s a very small, open economy …so that can promise you ridiculous things in a short space of time but over the long term, that can be very unsustainable,” Manias says.

Those interested in trading are not at the complete mercy of shysters. The South African Reserve Bank (SARB) enforces the exchange control legislation.

These “controls are most commonly imposed because of concerns about outward flows, but controls can also be imposed to restrict inward flows, for e.g. an influx of funds risks damaging an economy,” SARB reports on its site.

Despite vigilant monitoring, insalubrious practices by false traders can, at times, go unnoticed because scams often include scenarios where the victims voluntarily offer their money or personal information. 

“South Africa’s reserve bank has probably got one of the most sophisticated foreign exchanges, particularly for a developing country. That forex surveillance office functions incredibly well and it’s got a very good handle on how it manages forex in the market,” says Manias.

Big banks

According to reports, the dollar is the most traded currency globally, taking up 84.9% of all transactions. The euro is second at 39.1%, while the yen is third at 19.0%.

On the continent, the only local currency ranked among the most-traded in the international FX market, is the South African rand, which was placed at the end of the top 20 in 2017 – accounting for 1% of the world’s daily currency trading, according to a survey by the Bank for International Settlements.

Also, in the last three years, the rand has strengthened by almost 6.3% against the dollar since December 2015 – making it the strongest currency against the dollar in this period, according to data published in December 2018 by independent analyst Johann Biermann.

As much as this bodes well for the economy, it is an indicator that the rand is fluid/volatile. Fluidity reflects that the rand is highly malleable and is often affected by external conditions.

“The rand is too volatile. Today, it’s up 10 cents, then tomorrow, something silly happens; we have a Bosasa scandal and the next thing you know, the rand plummets again,” Manias laughs.

Economist Kathy Nicolaou Manias. Picture: Supplied

How can this fluidity be used to the advantage of those involved in currency?

In 2017, South Africa’s Competition Commission filed an affidavit stating that more than a dozen banks were illegally profiting from the rand’s volatility.

A total of 17 banks were implicated, three of them were South African banks.

Sproule says that those who can manipulate currencies do so because as conglomerates, they dominate the environment.

“There are only a handful of big market players, these are the banks that set the prices for the rand–the big banks.

“Because the rand is controlled by a couple of big players, it is much easier for them to move the market much faster. You only have to look at the fact that there will be announcements on policies that come out, and before that, the rand has already moved quite significantly.

“I think it’s easier to move because it’s controlled by a handful of people who have good access to information that we wouldn’t necessarily have access to,” Sproule says.

Manias acknowledges that there are instances where banks might exchange information, however, as part of common business practices that many partake in. 

“From a competition perspective, you can understand that if they [banks] are colluding to manipulate the exchange rate, they are driving the price up or down,” she says.

“Institutions would do things like that. Whether it’s done nefariously or with the intention of proven business practices – it’s difficult to prove.

“In the early ’90s, George Soros and his son collapsed the rand… If you have enough capital backing, you can easily do that. And South Africa is a small open economy, so it’s really vulnerable to that kind of volatility. (Cont)

Prev1 of 2
Use your ← → (arrow) keys to browse


‘Putting Money To Good Work’



Formerly with the British Army, Kenya-based 4G Capital CEO Wayne Hennessy-Barrett speaks about investing in artificial intelligence and fintech in Africa. 

CEO of a financial technology credit provider. How did that happen?

I moved into tech and financial inclusion after a career in the military, followed by a period of consulting. As an Infantry Officer in the British Army, I saw extreme suffering and poverty in Bosnia, Macedonia, Kosovo, Iraq, Afghanistan and elsewhere. 

In all these places, there were highly capable people who had lost their businesses, homes and, often, entire societies.

They didn’t need more war. What they needed was investment and the opportunity to grow their communities in peace. 

This affected me deeply and was, ultimately, the reason I left a military career to try to create positive value.

I wanted to directly address the problems that caused these conflicts: exclusion, injustice, ignorance, fear and a lack of opportunity.

What makes your credit products unique for Africa’s informal market sector?

We design, execute and iterate around our clients’ needs. Credit alone can be highly risky for all parties; we work hard to right-size our loans, and optimize the term and price-point to really boost our customers’ business.

If we can’t provide the right solution, then it’s important to be honest and wait until there is a fit, rather than just lend and risk that business getting into trouble.

What is the investment climate in Africa and how are you invested in the continent?

There are great returns to be had if businesses solve customers’ problems on terms that work for them. I am 100% invested in our operations in Africa. But the African investment climate has its own particular characteristics: business models and execution teams have to be resilient, innovative and robust, and deals will often be smaller than in other markets. Investors need to be as savvy and adaptive to opportunities as entrepreneurs.

Your most regrettable financial decision and lessons learned?

I’ve been extremely fortunate up until now. I took a position on gold in late 2012, believing that quantitative easing in the west would lead to strong prices in physical assets. This wasn’t the case, and 2013 began with some huge exits on the gold market which crashed prices for some time.  The lesson is that markets run on sentiment as well as logic, and you have to respect this.

What do you spend your money on mostly?

I believe in investing in quality, whether in a business capacity, or in great life experiences.  I love traveling with my family to amazing places and having really special times together. 

I’m afraid I’m also a total geek – I love tech and gadgets, but as long as they’re useful and don’t gather dust, I can justify it! 

How do you stay financially disciplined?

I didn’t have a lot of money growing up. I was raised by a single mum who worked incredibly hard to try to give her kids the best chance in life. It’s a very common experience echoed by about 80% of our customers. I reflect daily on how lucky I am. I believe in making money, putting it to good work, and enjoying the journey. Living within your means is pretty important to achieving this.

What is the most you would invest in Artificial Intelligence (AI) and why?

AI is both fascinating and immeasurably important. We all need to be active investors here to make sure it goes in the right direction. We have it in our power to design and utilize AI for the betterment of humanity, but these must be designed responsibly from the outset. 4G Capital is continuously evolving its AI to protect the individual and the values that build healthy societies. Our 6% NPL (non-performing loan) rate is under half the continental average in Africa, and a strong indicator of the overall financial health of our client base.

What are your investment decisions for the future?

Any investment is based on a better return for the future. We, therefore, cannot and must not invest in anything which threatens that future. I am very keen on the greentech/cleantech sectors as well as financial inclusion. Keeping a balanced portfolio between hard assets, longer term plays and cash is always wise.

Continue Reading


How Cryptocurrency Scams Work



Millions of cryptocurrency investors have been scammed out of massive sums of real money. In 2018, losses from cryptocurrency-related crimes amounted to US$1.7 billion. The criminals use both old-fashioned and new-technology tactics to swindle their marks in schemes based on digital currencies exchanged through online databases called blockchains.

From researching blockchain, cryptocurrency and cybercrime, I can see that some cryptocurrency fraudsters rely on tried-and-true Ponzi schemes that use income from new participants to pay out returns to earlier investors.

Others use highly automatized and sophisticated processes, including automated software that interacts with Telegram, an internet-based instant-messaging system popular among people interested in cryptocurrencies. Even when a cryptocurrency plan is legitimate, fraudsters can still manipulate its price in the marketplace.

An even more basic question arises, though: How are unsuspecting investors attracted to cryptocurrency frauds in the first place?

RELATED | Is Forex A Scam Or Money Goals?

Fast-talking swindlers

Some cryptocurrency fraudsters appeal to people’s greed, promising big returns. For example, an unknown group of entrepreneurs runs the scam bot iCenter, which is a Ponzi scheme for Bitcoin and Litecoin. It doesn’t provide information on investment strategies, but somehow promises investors 1.2% daily returns.

The iCenter scheme operates through a group chat on Telegram. It starts with a small group of scammers who are in on the racket. They get a referral code that they share with others, in blogs and on social media, hoping to get them to join the chat. Once there, the newcomers see encouraging and exciting messages from the original scammers. Some newcomers decide to invest, at which point they are assigned an individual bitcoin wallet, into which they can deposit bitcoins. They agree to wait some period of time – 99 or 120 days – to receive a significant return.

During that time, the newcomers often use social media to share their own referral codes with friends and contacts, bringing more people into the group chat and into the investment scheme. There’s no actual investment of the funds in any legitimate business. Instead, when new people join, the person who recruited them gets a percentage of the new funds, and the cycle continues, paying out to earlier participants from each round of newer investors.

Some members work especially hard to bring in new funds, posting tutorial videos and pictures of themselves holding large amounts of money as enticements to join the scam.

Lies and more lies

Some scammers go for straight-up deception. The founders of scam cryptocurrency OneCoin defrauded investors of $3.8 billion by convincing people their nonexistent cryptocurrency was real.

Other scams are based on impressing potential victims with jargon or claims of specialized knowledge. The Global Trading scammers claimed they took advantage of price differences on various cryptocurrency exchanges to profit from what is called arbitrage – simply buying cheaply and selling at higher prices. Really they just took investors’ money.

Global Trading used a bot on Telegram, too – investors could send a balance inquiry message and get a response with false information about how much was in their account, sometimes even seeing balances climb by 1% in an hour. With returns looking like that, who could blame people for sharing the scheme with their friends and family on social media?

Exploiting friends and family

Once a scheme has started, it stays alive – at least for a while – through social media. One person gets taken in by the promise of big returns on cryptocurrency investments and spreads the word to friends and family members.

Sometimes big names get involved. For instance, the kingpin behind GainBitcoin and other alleged scams in India convinced a number of Bollywood celebrities to promote his book, “Cryptocurrency for Beginners.” He even tried to make himself a bit of a celebrity, proclaiming himself a “cryptocurrency guru,” as he led efforts that costinvestors between $769 million and $2 billion.

Not all the celebrities know they’re involved. In one blog post, iCenter featured a video that purported to be an endorsement by Dwayne “The Rock” Johnson, holding a sign featuring iCenter’s logo. Videos of Justin Timberlake and Christopher Walken were deceptively edited so they appeared to praise iCenter, too.

Fraudulent initial coin offerings

Another popular scam technique is called an “initial coin offering.” A potentially legitimate investment opportunity, an initial coin offering essentially is a way for a startup cryptocurrency company to raise money from its future users: In exchange for sending active cryptocurrencies like bitcoin and ethereum, customers are promised a discount on the new cryptocoins.

Many initial coin offerings have turned out to be scams, with organizers engaging in cunning plots, even renting fake offices and creating fancy-looking marketing materials. In 2017, a lot of hype and media coverage about cryptocurrencies fed a huge wave of initial coin offering fraud. In 2018, about 1,000 initial coin offering efforts collapsed, costing backers at least $100 million. Many of these projects had no original ideas – more than 15% of them had copied ideas from other cryptocurrency efforts, or even plagiarized supporting documentation.

Investors looking for returns in a new technology sector are still interested in blockchains and cryptocurrencies – but should beware that they are complex systems that are new even to those who are selling them. Newcomers and relative experts alike have fallen prey to scams.

In an environment like the current cryptocurrency market, potential investors should be very careful to research what they’re putting their money into and be sure to find out who is involved as well as what the actual plan is for making real money – without defrauding others.

Nir Kshetri; Professor of Management, University of North Carolina – Greensboro

The Conversation

The Conversation

Continue Reading


Hulu Offers Glimpse Of An Edgier Future Under Disney’s Control As Subscriber Count Passes 28 Million




Hulu is poised to enter a new chapter in its history as the decade-old streaming service once dismissed as “Clown Co.” moves to refine its identity among a trio of direct-to-consumer services under the control of the Walt Disney Co.

The streaming service offered a glimpse of what’s to come Wednesday as it announced its programming lineup in a presentation at Madison Square Garden in New York City. Hulu is looking for more adult—and, in some cases, edgier and boundary-pushing—programming, as well as comedies that have something to say, in the mold of its new series Shrill.

The company said its viewer proposition—the ability to watch the stories they love, whenever and wherever they want—is catching on with consumers. Hulu said it increased its total customer base to more than 28 million—26.8 million monthly subscribers and 1.3 million promotional accounts. That’s up from 25 million paid and promotional accounts reported in January.

Hulu’s viewers are 20 years younger than those who pay for cable or satellite TV subscriptions — the median age is 31; and some 21 million have either canceled their pay TV subscriptions or never signed up in the first place.

“Hulu’s continued growth, as well as the shows and initiatives announced today, reflect our deep investment in product, programming, brand, customer experience,” CEO Randy Freer said in a statement.

The venerable Hulu will need to differentiate itself as more than a mere cable substitute, as media giants like AT&T’s WarnerMedia and cable giant Comcast prepare to launch their own streaming services. It’ll also need a distinct identity within Disney, which gained a controlling interest in the streaming service with its March acquisition of 21st Century Fox and plans to launch a family-focused Disney+ in November.

Hulu called in some serious star-power to highlight its original series, including Margot Robbie, producer of the forthcoming series Dollfacestarring Kat Dennings, Mindy Kaling, who’s producing an adaptation of Four Weddings and a Funeral, and George Clooney, who stars in a dark, satirical comedy based on Joseph Heller’s novel, Catch-22.

The streaming service greenlighted Nine Perfect Strangers, starring Nicole Kidman, an adaptation of the New York Times bestseller from Big Little Lies author Liane Moriarty. The series, from acclaimed television writer and producer David E. Kelley and John Henry Butterworth, takes place at a boutique health-and-wellness resort that promises healing and transformation to nine stressed city dwellers.

Hulu is also benefiting from Disney’s decision to end its relationship with Netflix, which had created four well-received series based on Marvel characters.

Hulu will add two new live-action series drawn from the Marvel universe, Marvel’s Ghost Rider and Marvel’s Helstrom, whichare slated to debut in 2020. For those not versed in the canon: Ghost Rider (aka Robbie Reyes) is an antihero, consumed by hellfire and supernaturally bound to a demon. Meanwhile, Daimon and Ana Helstrom are the son and daughter of a mysterious and powerful serial killer. Together, the siblings track down the worst of humanity.

The series join a growing superhero roster on Hulu that includes Marvel’s Runaways, which is entering its third season, and previously announcedadult animated series based on the popular Marvel Television characters Hit-Monkey, Tigra and Dazzler, Howard the Duck and Mental Organism Designed Only for Killing (or MODOK).

Following the success of Hulu’s 2019 comedy slate, it ordered second seasons of Pen15, in whichMaya Erskine and Anna Konkle play versions of themselves as 13-year-old outcasts in the year 2000, and Ramy, a series that follows first-generation Egyptian-American Ramy Hassan on a spiritual journey in his politically divided New Jersey neighborhood.

Hulu confirmed its order for The Dropout, a limited series starring Kate McKinnon, who comically bow-leg walked on stage in heels to talk about her portrayal of Elizabeth Holmes, the founder of the blood-testing company Theranos who is now awaiting trial for fraud.

“Hello advertisers,” McKinnon deadpanned. “I have never been to an Upfront before. If you need the blood of an upfront virgin, I am your gal.”

The service also said it will partner with Vox Media Studios, David Chang’s Majordomo Media and Chrissy Teigen’s Suit & Thai Productions to develop and produce a slate of premium food-centric programming for Hulu.

Dawn Chmielewski; Forbes Staff

Continue Reading