Let the Buyer Beware

The Vietnam dong currency scam is in fact not the first of its kind. Its now heavily written about predecessor is the Iraqi Dinar scam. This week’s post will be focussed on drawing parallels between the two, by which I hope to help warn any potential future “investors”, as scammers look for fresh victims by pushing a new currency – the dong.

A common tactic for the Iraqi dinar scam was for the online sellers to greatly exaggerate real world events and how an “imminent” a positive currency revaluation would result. In the case of Iraq, this frequently involved promoting the county’s “vast” natural oil fields. The same tactic can now be seen for the Vietnamese dong. They try to push the currency by taking the victim’s attention away from chronic inflation problems and frequent devaluations, by instead exaggerating the economic impact of increasing exports and big multinational manufacturers such as Samsung setting up factories there. Please note that the dinar was on the verge of its “imminent” revaluation for the best part of a decade (and for those “investors” unwilling to accept they were scammed, it still is).

Much of the success of the dinar scam was attributed to the fact that the buyers could physically hold the fiat currency and feel the security associated with this. While this sense of security remains a debated topic for even the most developed non-asset backed currencies, in the eyes of an American buyer, it should be almost non-existent for the dong due to its illiquidity.

Even if by some miracle the dong did positively revalue, there is not a legitimate FX exchange in the United States that would touch it and even less chance that the original seller will buy it back. Furthermore, it is technically illegal to be holding it outside of Vietnam, so anybody caught “smuggling” it back in to exchange it would have the amount seized and risk arrest and imprisonment in Vietnam. Even if it was successfully smuggled back in, it would have to be exchanged at a huge discount on the black market.