Scam Prevention Guide: Investment Scams Targeting In-kind Withdrawals / Redemptions

Overview

This guide explains how investment scammers may attempt to misuse the in-specie redemption process for Monochrome's Bitcoin and Ethereum ETFs. Understanding how these scams operate can help you recognise warning signs and protect your investments.

Key Message

If someone is guiding you step-by-step on how to move your investment, or telling you what to say to your bank, broker, Automic, Gemini or Monochrome, it is a strong indication that you may be dealing with a scam.

How It Works: In-specie Redemption Investment Scams

Scammers may:

• Contact you unexpectedly by phone, email, text message, social media or instant messaging platforms such as WhatsApp, claiming to be investment advisers or cryptocurrency experts.
• Invite you to WhatsApp, Telegram, Facebook or other online investment groups promoting Bitcoin or Ethereum investments.
• Build trust over time by appearing knowledgeable and developing a relationship with you.
• Pressure you to invest or promise guaranteed returns.
• Instruct you to convert your ETF holdings from CHESS sponsorship under a Holder Identification Number (HIN) to issuer sponsorship under a Security Holder Reference Number (SRN) as part of a redemption process.
• Encourage you to submit an in-specie redemption request such that the underlying Bitcoin or Ethereum is eventually transferred to a cryptocurrency wallet or exchange account under their control or influence.

In some cases, customers have been:

• Given scripts or instructions about what to tell their bank, broker, Automic or Monochrome to avoid security checks.
• Encouraged to act urgently or keep the transaction confidential.
• Coached through each step of the redemption process to ensure the cryptocurrency is eventually transferred to a wallet or exchange account controlled by the scammers.

Monochrome Asset Management or its related parties do not provide personal investment advice and will never contact you by phone, email, text message, social media or messaging platforms to recommend investment products or pathways based on your personal circumstances.

Warning Signs

Be cautious if you:

• Receive unsolicited investment advice or investment opportunities.
• Are invited to join an investment WhatsApp, Telegram or social media group.
• Feel pressured to act immediately.
• Are instructed to change the way your investment is held or redeemed.
• Are told or instructed what to say to your bank, broker, Automic or Monochrome Asset Management.
• Are promised or guaranteed high investment returns.
• Are instructed to do an in-kind or in-specie transfer by a third party.

How to Protect Yourself

You can reduce your risk by:

• Ignoring unsolicited investment offers or advice received through social media, messaging apps or online groups.
• Verifying the identity of anyone contacting you using independently sourced contact details.
• Always check and verify the email address of the sender. All communications from Monochrome will always come from the official @monochrome.co domain.
• Being cautious of requests to convert your holdings from CHESS sponsorship to issuer sponsorship or to redeem your investments.
• Taking time to seek independent, licensed financial advice before making investment decisions.
• Ensuring you understand the ETF, its features and the redemption process before proceeding.
• Never relying on strangers or online investment groups for financial guidance.

If You Think You've Been Targeted

If you believe you may have been targeted by an investment scam:

• Stop any transactions immediately.
• Notify your broker and your bank if any transactions have already been initiated.
• Report the scam to Scamwatch at scamwatch.gov.au and, where appropriate, your local police.
• Visit the Moneysmart website at moneysmart.gov.au/online-safety for more information.