NZ High Court Rules BlackfortFX as Ponzi Scheme, Seeks Reparations of $7m

New Zealand-based Arena Capital Limited, operating a website under the moniker BlackfortFX, was ruled to be a Ponzi Scheme Ponzi Scheme A Ponzi scheme is a scam that looks to lure investors, ultimately paying profits to earlier investors with funds from more later investors.This form of fraud tricks victims into believing that products are instead generated from product sales or other means. In actuality, most investors are completely oblivious to the actual origin of incoming funds.One of the central attributes of a Ponzi scheme is the necessity of its ongoing nature, which is dependent on a steady flow of new contributions and A Ponzi scheme is a scam that looks to lure investors, ultimately paying profits to earlier investors with funds from more later investors.This form of fraud tricks victims into believing that products are instead generated from product sales or other means. In actuality, most investors are completely oblivious to the actual origin of incoming funds.One of the central attributes of a Ponzi scheme is the necessity of its ongoing nature, which is dependent on a steady flow of new contributions and Read this Term by a NZ High Court recently, which decreed that the firm owes clients a total of $7.0 million for illicit activity, according to a NZ Herald report.

BlackfortFX has been under investigation and in the regulatory crosshairs by the country’s Financial Markets Authority (FMA) since last May, which consequently froze its assets, paving the way for liquidation in August. Arena Capital Limited is registered on NZ’s Financial Service Providers Register, having claimed to be providing foreign Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term (FX) trading services to its clients.

However, a subsequent probe by both the FMA and the Serious Fraud Office into Arena Capital’s activities was launched after numerous complaints from overseas clients questioning the status of their funds. As of last August, liquidators from insolvency firm KordaMentha noted that Arena Capital had upwards of 1,110 clients.

Neale Jackson, co-liquidator in the Arena Capital case, also failed to find any evidence that Arena Capital had actually engaged in trading across FX markets, ultimately failing to generate profits for itself or clients. Following an investigation lasting over six months however, the NZ High Court has now determined that BlackfortFX was operating as a Ponzi scheme, and it is now on the hook for upwards of $7.0 million to clients, despite having only $728,000 in the company's bank account.

According to NZ Justice, Cameron Mander, in a recent statement on the case: “The investment activity, which the company purported to operate, was a fraud. The monies deposited by all the investors were not used for the purpose for which they were provided and, to that extent, all the investors share that common complaint.”