By
Chainwire
August 7th, 2022
As detailed by Washington DFI, the issues arose when the investor attempted to withdraw some of their initial investment and reported gains.
The Washington State Department of Financial Institutions (DFI) is currently investigating a potentially fraudulent cryptocurrency exchange called “Ethfinance.” According to the agency, an investor filed a complaint after losing $310,000 on the platform.
From LinkedIn Lead to Losing Large
According to a DFI consumer alert, the investor found out about Ethfinance through a random friend request on LinkedIn. However, it didn’t just stop there. The investor ended up transferring a total of $310,000 from their DeFi wallet to the platform on the promise of high crypto trading profits.
As detailed by Washington DFI, the issues arose when the investor attempted to withdraw some of their initial investment and reported gains. The complainant was met with one of the oldest tricks in scamming. They needed to send more funds to complete a “smart contract” before withdrawal. Recognizing this as a potential scam tactic, the investor refused to send additional money. Following this, the investor claimed that they were locked out of their account, leaving them with no access to their funds.
Washington DFI Tags Case ‘Advance Fee Fraud’
According to the DFI, this case has all the makings of an “Advance Fee Fraud”. That is, a kind of scam that targets victims with promises of high returns, but in exchange for upfront payments. Once the initial payment is made, scammers either decide to run with the money or push their luck further by making more demands under various pretexts.
Meanwhile, lending further credence to this case is the fact that the DFI’s crypto scam tracker reveals a previous complaint against Ethfinance. Another victim, a California resident, reportedly lost over $165,000 in a similar scheme involving a stranger offering crypto options trading lessons. This victim only got to know that they’ve been scammed after being asked to send 25% of profits they were yet to withdraw.
The Washington DFI posted three additional alerts on June 13. Two were for allegedly shady crypto exchange platforms such as Ethfinance, while the third was about a fraudulent investment management platform.
These incidents highlight the growing prevalence of crypto scams and the importance of investor vigilance. By staying informed and exercising healthy skepticism, investors stand a better chance of minimizing the risk of falling prey to fraudulent schemes.
