Investment experts say they believe a Kiwi-based travel company’s loss of millions of dollars of customer funds to cryptocurrency was “gambling”.
Customers have also laid complaints about Hutt Valley-based We Are Bamboo with the police, Commerce Commission, and Serious Fraud Office (SFO). The police have closed their investigation and left further inquiries with the SFO and Commerce Commission, which have suspended their investigations pending the outcome of the company’s liquidation.
Today, the Herald revealed director Colin Salisbury lost more than US$2 million ($3.24m) on crypto trading, according to a liquidator’s report. The trading spanned what has been described as a “staggering” 59,000 transactions and included payments to several fraudulent crypto platforms.
The losses have left hundreds of customers out of pocket after they paid for their trips, only to be told in October the company was folding and they would not be receiving their money back.
The company allowed customers to book international holiday packages that included time spent volunteering in communities, as a way for travellers to give back to the places they visited.
But financial adviser Darcy Ungaro said crypto was not the issue.
Ungaro viewed crypto, specifically Bitcoin, as a valid investment that could be included in investors’ portfolios. He said it had turned from a high-risk investment into “quite a legitimate asset class in the eyes of some investment advisers”.
But in this situation it, he believed, was “more of a case of a problem gambler than a crypto enthusiast,” he said.
“With people who’ve got financial issues or they have an appetite for risk without much balance ... they’re probably going to gravitate towards anything that’s easy and exciting, and so crypto, as it’s known as a really volatile investment, naturally attracts those that are predisposed to take risk.
“As soon as there are large pots of money within the control of some people, if there’s especially a lack of regulation around their business model, they’re more likely to make investments or gamble with it.”
Salisbury told liquidators BDO he invested the money because he was concerned about the US dollar’s stability, but Ungaro was unconvinced.
“I would suggest that that’s really just a convenient excuse,” he said.
Investment director at Craigs Investment Partners, Mark Lister, also said it was a “ridiculous concern” and the actions were “incredibly foolish”.
“If the solution to nervousness around the safety of the US dollar is to put the money into crypto, then it really just highlights how little someone knows about anything related to the financial markets.
“I’m not sure any of [the customers] would have expected those deposits to be invested in any risky asset, not the share market, not the property market, certainly not crypto. So that is presumably an approach that was completely out of line with what those customers were expecting and it’s unfortunate that this business has chosen to disrespect those people’s money in that way and just lose it all.”
Lister said cryptocurrency was “a hugely volatile space”, but also noted that customer money shouldn’t have been put into any type of investment class.
“It should be put in something with the utmost security in mind, not in a volatile asset that moves up and down ... crypto is a whole new level in terms of its volatility and the potential ups and downs that you can see in those sorts of very high-risk assets.”
Pie Funds founder Mike Taylor said, in his opinion, it was “using someone else’s money to gamble”.
The money should have been in a bank, and “they shouldn’t have been doing anything else with it”.
“If they generated profit from their business and they want to punt it into crypto, good for them, but client money, you shouldn’t be doing that.”
Customer Deb Baldwin said she was supposed to be taking a Bamboo trip to Uganda last February, but instead “just my money went for a ride”.
“I day trade a lot, but not crypto, and looking back on the prices of crypto, while the price goes up and down, it has always been higher than it was in October 2020,” said the Canadian woman.
“I do hope that a very detailed investigation into the crypto trades is conducted.”
She said the number of trades Salisbury made was “staggering”.
“It can be easy to lose money in the stock market, so the fact that they felt it okay to gamble with a couple mil of other people’s money makes my blood boil.”
Anne-Marie Taylor, 68, of Wales, had paid in full for a trip to Vietnam, as well as a bond for another trip next year.
In total, she lost US$2750 ($4445). The pensioner is on a fixed income, and could not afford to lose thousands of dollars with nothing to show for it.
“They were holidays I had planned, they were all on my wishlist. I don’t know when or if I will ever be able to get there,” she said.
She was “absolutely sickened” to hear where the money had gone.
“That was not their money to gamble with,” she said. “It should have been in a safe place.
“I just hope that some justice can be brought, because I can’t see us ever getting our money back.”
She had gone on a trip with Bamboo in the past, in which she taught English to 5 and 6-year-olds in Cambodia, and another where she helped care for elephants in Thailand.
“It was absolutely amazing. It wasn’t just a holiday, you actually felt like you were making a difference to some of the people that were living in those countries.”
Alaska woman Shelly Miller said the funds should have been put away until they were needed for the trips.
“It does feel like Colin and [co-founder Mark Foster-Murray] should be held accountable in some way.”
Miller recognised she was fortunate the loss of her deposit wasn’t going to “kill me financially”, but said others scrimped and saved for the trips only to lose everything.
At the time of its closure, Bamboo blamed Covid, as well as a group of customers who “were not prepared to wait [for delayed trips], and their actions and online influence have broken us, which impacts us all”.
“Our intentions here are not to play the victim but simply share with you the levels to which this group has gone to ensure our downfall, and made it their sole purpose to attack us, our families, our staff and our customers with the intent to destroy Bamboo.
“Our lawyers have advised us that several individuals have crossed the line, and there is a case and evidence for criminal proceedings.”
When asked by some customers whether they would be refunded the thousands of dollars already paid for future holidays, the company told them via email they would not be receiving refunds, invoking the “force majeure” section of their terms and conditions. Most of the customers were from the United States, Britain, Canada and Australia.
Melissa Nightingale is a Wellington-based reporter who covers crime, justice, and news in the capital. She joined the Herald in 2016 and has worked as a journalist for 10 years.
The woman was shaken by the incident.