Two businessmen have been penalised $440,000 after using cryptocurrency in an illegal scheme to buy a massive farm.
The penalties were handed down in the High Court against Australian citizen Daniel Klaus and New Zealander Michael Newcomb, following an investigation into the purchase of 91 hectares of sensitive farmland in northern Hawke's Bay.
Klaus used an arrangement with Newcomb to bypass the Overseas Investment Act to purchase the $4.5 million property using cryptocurrency through a newly formed New Zealand company, Let’s Go Property Investments Ltd.
Under the law, an overseas citizen requires official consent to purchase sensitive land of that size and nature. The arrangement allowed Klaus to use cryptocurrency he wanted to convert into cash via a non-cash platform, which violated the act's associate provisions.
According to Land Information New Zealand (LINZ), the arrangement later soured, and Newcomb pulled out of the company, transferring all his shares to Klaus. This transaction, resulting in direct ownership of sensitive land by an overseas person without consent, was also illegal.
