Washington state regulators are investigating Ethfinance, a crypto trading platform, after a local investor reported losing a staggering $310,000. The case raises red flags about possible crypto scams preying on unsuspecting victims via social media.
Ethfinance: friend request gone wrong
The anonymous investor, according to Washington State Department of Financial Institutions (DFI), discovered Ethfinance via a “random friend request on LinkedIn”. This seemingly innocuous online interaction turned into a financial nightmare. Lured by the promise of high returns on cryptocurrency trading, the investor transferred a total of $310,000 from his DeFi wallet to Ethfinance.
However, when the investor attempted to withdraw some of his initial investment and purported profits, things took a suspicious turn. Ethfinance customer service, communicating only via Telegram Messenger, asked the investor to send additional funds to enter into a “smart contract” before authorizing any withdrawals.
This tactic, commonly seen in advance fee scams, raises serious concerns about the legitimacy of the platform. The investor, rightly suspicious, refused to send more money and has since been locked out of his account, unable to access the invested funds.
Total crypto market cap at $2.38 trillion on the daily chart: TradingView.com
Regulator issues warning and more platforms are reported
The DFI, while emphasizing that it has not verified all the details of the complaint, issued a public warning classifying the matter as potential ““Advance Fee Fraud”. These schemes often lure victims by promising high investment returns, then require payment of fees or taxes before the supposed winnings can be withdrawn, a DFI spokesperson said, mirroring tactics used by the Securities and Exchange Commission. U.S. Exchange Commission (SEC) to identify similar scams. .
The DFI alert serves as a stark reminder to Washington residents to be extremely cautious before responding to any unsolicited investment offers, especially those coming from social media or messaging apps.
Social media and crypto: fertile ground for scams?
The department further emphasized that any investment professional offering services to Washington residents must be licensed with the DFI. This incident is not an isolated case. The DFI also flagged two other cryptocurrency trading platforms, WTOCoin and Foundation-coin, for exhibiting similar red flags, including difficulty withdrawing funds for investors.
The rise of social media platforms like LinkedIn has created new opportunities for fraudsters to target potential victims. Cryptocurrency, with its inherent complexities and lack of broad regulation, can further mask fraudulent activity. Investors, especially those new to crypto, are particularly vulnerable to these online tactics.
Featured image from Outseer, chart from TradingView
