The Department of Financial Institutions (DFI) in Washington State has released a warning regarding a sophisticated cryptocurrency investment fraud that is spreading via Facebook and other social media platforms. Promises of profitable investment opportunities are used in this scam to entice victims, who are then tricked using a variety of dishonest techniques.
Social media advertisements are the first part of the system; they send viewers to a webpage with a “Letter from the Professor” or “Letter from the Dean.” Constructed by con artists, these websites make false claims of association with organizations such as “Academy,” “Business School,” or “Wealth Institute” in order to appear credible.
Interested individuals are then invited to join WhatsApp or Telegram groups, managed by people posing as professors, advisors, or assistants. These groups also include members pretending to be investors, who might be bots or collaborators in the scam. Within these groups, users receive daily trading signals and investment tips, purportedly leading to substantial returns.
The Real Deception
Victims are then directed to a cryptocurrency trading website and encouraged to invest using the group’s information. The scam intensifies when scammers offer high-dollar loans or lines of credit to meet capital requirements for certain investments. These loans are processed informally through messaging platforms, with victims providing financial details and signing fake loan documents.
If victims decline the loan offer, “assistants” claim to borrow cryptocurrency on their behalf, depositing it into the victim’s trading account, complete with a screenshot as proof. However, the DFI found no blockchain record of these transactions, indicating their falsity.
Victims are told they can repay the loan using their platform profits. But when attempting to do so, their accounts are frozen, and they are asked to repay the loan from personal funds. Scammers even threaten legal action if victims refuse repayment.
“DFI has yet to receive a report where an investor was able to withdraw their funds by paying the loan back,” stated the announcement.
In one instance, a victim was scammed out of $300,000 by a group operating under the name “Excellence and Innovation Fortune Business School,” which fronted for the ICHCOIN cryptocurrency scam. This type of fraud, where scammers pose as professionals, is becoming increasingly common in the crypto space.
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