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Trading fraud: When the digital economy dream goes awry
Online trading fraud brings to the surface the critical question of who must or, indeed, who can bear the transaction costs of the digital utopia when it fails.
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Literacy forum: Millennials participate in a talk show organized by state-owned company PT Danareksa at Gandaria City Mall in South Jakarta on Jan. 15. The event aims to promote public literacy in finance and investment amid the hyped online trading. (Antara/Courtesy of Danareksa)
T
he recent arrests of so-called “crazy rich Indonesians” on charges of digital trading fraud highlight a growing problem. Influenced at least in part by President Joko “Jokowi” Widodo’s vision of a digital utopia, the public has come to accept all things data-based as shortcuts to a better future. When it comes to personal finance, the utopian promise is that everyone can now easily learn their way into financial prosperity through online trading.
Online trading is a minefield. Recruited by international trading companies such as Binomo or Quotex, finance personalities like Dony Salmanan and Indra Kenz entice people to make yes-or-no bets on asset prices. They refer to this as high-risk investing. In fact, it is closely akin to gambling, a de facto illegal activity in Indonesia.
As in gambling, only “the house” is guaranteed a win; many victims lose significantly. The Financial Services Authority (OJK) has responded by clamping down on what it calls online trading fraud.
That is a limited response to a major social and cultural challenge. For good reason, Indonesia’s digitalized, high-risk financial gambles are greeted by its victims as salvation for the poor and the aspiring. National leaders have long touted digital transformation as both inevitable and destined to solve everything from corruption and poverty to natural disasters.
This is what technology scholar David Nye called the “technological sublime,” an imagined world where technology carries within itself a kind of irresistible physical, moral and intellectual power. It cannot go wrong.
Technological reality, however, is more complex. On the one hand, digital technology represents objectivity and fairness. The fact that it works through a series of binary codes and numbers gives people the sense that it is precise and truthful. On the other hand, sophisticated algorithms and aggregate processing at super speed means that the technology is steadily moving beyond our capabilities to really understand it. There is constant oscillation between how dynamically compelling and how inscrutable digital data is.
This dual reality shows us where victims of online trading scams live—on the line between reason and faith. Authoritative voices invite and expect Indonesians to trust a digital world that includes a rapidly changing financial infrastructure featuring such novelties as e-money, online banking, crypto and PayLater.
