Washington state regulators are investigating Ethfinance, a cryptocurrency trading platform, after a local investor reported a staggering $310,000 loss. This case raises red flags about potential cryptocurrency scams targeting unsuspecting victims via social media.
Ethfinance: Error in friend request
The investor, whose name was not mentioned, according to Washington Department of State for Financial Institutions (DFI)He was introduced to Ethfinance through a “random friend request on LinkedIn.” This seemingly innocuous online interaction turned into a financial nightmare. Attracted 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 tried to withdraw some of his initial investment and supposed profits, things took a suspicious turn. Ethfinance customer service, which communicates only through Telegram messenger, required the investor to send additional funds to complete the “smart contract” before allowing any withdrawals.
This tactic, commonly seen in advance fee scams, raises serious concerns about the platform's legitimacy. The investor, who was rightly cautious, refused to send more money and his account has since been closed, and he has not been able to access his invested funds.
Total crypto market cap at $2.38 trillion on the daily chart: TradingView.com
Warning about organizer issues, flagged for more platforms
Although DFI emphasized that it had not verified all the details of the complaint, it issued a general warning classifying the case as probable.Advance fee fraud scheme. A spokesperson for the organization said that these schemes often lure victims by promising high returns on investments and then require fees or taxes to be paid before any supposed profits can be withdrawn, which reflects the tactics used by the US Securities and Exchange Commission (SEC) to identify similar scams. . .
The DFI alert is a stark reminder to Washingtonians, urging them to exercise extreme caution before responding to any unsolicited investment offers, especially those originating from social media or messaging apps.
Social media and cryptocurrencies: fertile ground for scams?
The department also stressed that any investment professional providing services to Washington residents must be licensed by DFI. This incident is not an isolated case. DFI also cited two other cryptocurrency trading platforms, WTOCoin and Foundation-coin, for displaying similar red flags, including difficulties in withdrawing funds for investors.
The rise of social media platforms like LinkedIn has created new ways for scammers to target potential victims. Cryptocurrencies, with their inherent complexities and lack of mainstream regulation, can further obscure fraudulent activity. Investors, especially those new to cryptocurrencies, are particularly vulnerable to these online tactics.
Featured image from Outseer, chart from TradingView