According to DFI’s statement, the investor became aware of the Ethfinance platform through a “random friend request” sent to him on LinkedIn. This is an indication that professional networking platforms are frequently misused by fraudsters. Investors should be cautious about investment opportunities, especially from people they do not know, and should always conduct thorough research.

DFI stated that the investor transferred a total of $310,000 from his “DeFi wallet” to the Ethfinance platform in the hope of making profits by trading crypto. At this point, the term “DeFi wallet” refers to a self-sovereign cryptocurrency wallet that does not depend on a centralized authority. While the use of DeFi wallets seems to eliminate the need for traditionally intermediary institutions such as banks, it is important for investors to investigate the security standards and reputation of these platforms.

According to the statement, when the investor tried to withdraw part of the initial investment amount and the reported profits, Ethfinance’s customer service department (contacted via Telegram) said that he needed to add more funds in order to complete the “smart contract” and then be able to withdraw funds. This “smart contract” requirement is a sign of a classic “Payment-Based Fraud” method. Scammers attempt to trick victims into paying additional money to supposedly complete the transaction or access winnings. The investor refused to send additional funds and has since been locked by the platform, unable to access his account. DFI stated that they did not verify the allegations, but the case was similar to this method of fraud.

Such schemes often lure victims by promising high returns on investments and then require them to pay fees or taxes before the purported winnings can be withdrawn, according to the U.S. Securities and Exchange Commission. At this point, DFI warns investors to investigate whether the rates of return offered to them are realistic. Promises of very high returns are often a sign of a scam.

Another important purpose of Washington DFI in announcing this event is to encourage investors to cooperate with licensed and reliable platforms. DFI also issued a warning about two fake crypto exchanges and a fake investment management platform on the same day. This emphasizes the importance of investors researching the history and reputation of platforms operating in the cryptocurrency market, reviewing user comments and checking their license status.

In conclusion, this announcement by Washington State is important to raise awareness of the fraudulent methods that investors in the cryptocurrency market may face. Investors should be wary of random offers from social media platforms, do not believe promises of high returns, be wary of newly established platforms and cooperate only with licensed investment professionals. Remember, spotting the scam early can help you avoid becoming a victim of scammers.