Some Kiwis who ploughed tens of thousands of dollars into investments associated with a controversial Chinese billionaire are now struggling to get their money out prompting a warning from New Zealand's investment watchdog.
Last year in July a group of 60 mostly Chinese New Zealanders protested outside the ANZ's lower Queen St branch in Auckland and told the Herald that New Zealand banks had blocked them from sending around $3 million to a US-based media company.
The company they were trying to invest in - GTV Media Group - is linked to exiled Chinese billionaire businessman Guo Wengui - also known as Miles Guo who was reported to be under investigation by the FBI by the Wall St Journal at the time.
Now the Financial Markets Authority is warning the public about GTV and an associated company called Himalaya Exchange after receiving complaints from two investors.
The first investor told the regulator in August this year he had paid thousands of dollars to GTV for a supposed cryptocurrency called "G-Dollars" – but was unable to withdraw his investment.
Last month a second investor complained to the FMA that he had sunk more than US$9000 into "H-Coins" associated with Himalaya Exchange, after being promised returns or dividends of "10 times or more".
The investor told the FMA that the company claimed the H-Coins value could surpass Bitcoin.
But when he wanted to sell them, first HE's local rep said he should wait until H-coin started trading, then that he needed to contact HE's customer service centre overseas.
The investor filled in a refund form but the money was not returned to him.
Eventually the investor was able to get his H-Coin money back via his bank.
But he was still trying to recover tens of thousands of dollars he paid to "G-Clubs" – another entity associated with Miles Guo – for a "membership" that supposedly qualified for a "free gift" of shares in an entity called "G-Fashion".
He told the regulator: "I feel very distressed that there's still hundreds of people who remain in the organisation."
On September 13 the US Securities and Exchange Commission charged GTV Media Group, Saraca Media Group and Voice of Guo Media with conducting an illegal unregistered offering of GTV common stock.
The SEC also announced charges against GTV and Saraca for conducting an illegal unregistered offering of a digital asset security referred to as either G-Coins or G-Dollars.
In a statement it said the respondents had agreed to pay more than US$539 million to settle the SEC's action.
According to the SEC from April through to June 2020, the companies solicited thousands of individuals to invest in the GTV stock offering.
During the same period, GTV and Saraca also solicited individuals to invest in the digital asset offering.
"The order finds that the respondents disseminated information about the two offerings to the general public through publicly available videos on GTV's and Saraca's websites, as well as on social media platforms such as YouTube and Twitter.
"Through these two securities offerings, whose proceeds were commingled, the respondents collectively raised approximately US$487m from more than 5000 investors, including US investors."
But no registration statements were filed or in effect for either offering, and the respondents' offers and sales did not qualify for an exemption from registration.
Sanjay Wadhwa, deputy director of the SEC's enforcement division, said Issuers seeking to access the markets through a public securities offering must provide investors with the disclosures required under the federal securities laws.
"When they fail to do so, the commission will seek remedies that make harmed investors whole, such as an unwinding of the offering and a return of the funds to the investors."
Richard Best, director of the SEC's New York Regional Office, said thousands of investors had purchased GTV stock, G-Coins, and G-Dollars based on the respondents' solicitation of the general public with limited disclosures.
"The remedies ordered by the commission, which include a fair fund distribution, will provide meaningful relief to investors in these illegal offerings."
The SEC said GTV and Saraca did not admit or deny the SEC's findings that they breached the US Securities Act but they agreed to a cease and desist order and to make the settlement.
Gillian Boyes, the FMA's investor capability manager, said its advice to New Zealand was to avoid businesses offering financial services that are not on the New Zealand Government's Financial Service Providers Register.
She said investors were at greater risk of losing some or all of their investment if they send money to an entity that is not listed on the FSPR.
"The simple act of checking the register on www.fspr.govt.nz can save you a lot of headaches and regrets," she said.
"If a company wants to offer financial services to New Zealand residents, such as selling shares or cryptocurrency, it must be on the FSPR."
Boyes also warned investors off overseas entities.
"Local entities have to register with a dispute resolution scheme, which allows you to make a complaint if something goes wrong. It's a lot harder to get your money back with an overseas firm."