Avoid Illegal Investments

Investments promise profits but also bear risks. However, the trap of illegal investments is not a risk, and instead should be avoided by prospective investors.

ADITYA DIVERANTA

List of investment packages offered by PT Dunia Coin Digital or WX-Coin. Photo taken on Tuesday (16/11/2021).

On 6 Jan. 2022, Kompas reported its investigative coverage on crypto assets fraud. The investigation traced four illegal entities operating a Ponzi scheme under the guise of a crypto asset.

The coverage also found that the perpetrators benefited from consumers’ lack of understanding and general unawareness among the public about crypto asset trading. The promise of big profits lured consumers. Sadly, not all consumers were well informed about crypto assets. As a result, they unknowingly entered the trap of illegal investments and entities.

Also read:

> Crypto Scammers Use MLM Network to Lure Victims

> Investor Protection Should be a Priority

Illegal financial services and investment companies are still around us. This is shown by, among others, data at the end of December 2022 from the Investment Caution Task Force, which has closed 97 illegal investments, 82 illegal pawnshops and 619 illegal online loans. Their closure was meant to prevent the public from being trapped by losses.

The total losses incurred by the public due to illegal investments reached Rp 112.2 trillion in 2022. Of this amount, Rp 106 trillion in funds were lost in the case of the Indosurya Credit Savings Cooperative. The remainder was lost through various types of illegal investments, including illegal robot trading, the Ponzi scheme, illegal forex investments and illegal pawnshops.

KOMPAS/ADITYA DIVERANTA

Gatuk Indarto's WinCash Wallet application front view which was deactivated when accessed on Wednesday (1/12/2021). The application becomes a digital wallet where WinCash Coin crypto assets are transacted.

Meanwhile, the Financial Transaction Reporting and Analysis Center (PPATK) found illegal transactions worth Rp 35 trillion during the 1 Jan. -1 Dec. 2022 period. The illegal investments mostly used financial technology, including crypto assets and robot trading, as well as digital payment services to cover their tracks.

Illegal investments generally offer unusually and sometimes unreasonably, even suspiciously, large profits or rates of return. Yet the suspicion is often ignored because of the desire to rake in huge profits in a short time.

Also read:

> Investment Scammers Use Crypto for Cover

Besides, in the circle of association there is a tendency among some people to follow the latest developments so they are not seen as being left behind the trend, dubbed FOMO (fear of missing out). When crypto assets trading is widely discussed, for instance, some people hastily place their funds in crypto asset entities or engage in physical crypto asset trading without checking their legal status.

In Indonesia, legal crypto asset entities can be checked on the bappebti.go.id website.

The Financial Sector Development and Strengthening Bill, which was endorsed on 15 Dec. 2022 for passing into law, contains a provision on strengthening consumer education and protection at the Financial Services Authority (OJK). According to an OJK survey, the 2022 financial literacy index for Indonesia stood at 49.68 percent. Strengthening consumer education and protection is expected to increase the public’s financial literacy so they will not be easily tempted by the lure of illegal investment schemes.

This article was translated by Aris Prawira.