The Washington State Department of Financial Institutions (DFI) is warning investors about a crypto scam that has become popular recently. This scam is carried out by people hiding behind seemingly trustworthy identities, such as professors or academics.

Scams often start with ads on social media platforms such as Facebook offering attractive investment opportunities. When users click on the ad, they are directed to a website designed by scammers.

This website contains “Letter from the Professor” or “Letter from the Dean” texts claiming to be associated with a fake “Academy”, “Business School” or “Institute of Wealth”. This method of creating a fake reputation aims to gain the trust of potential victims.

Interested individuals are then invited to groups created on messaging applications such as WhatsApp or Telegram and managed by people with titles such as professor, consultant or assistant. These groups also include people who act like other investors. DFI warns that these people may actually be bots or part of a scheme controlled by scammers.

In these groups, investors are offered daily trading signals and investment advice with the claim that they will achieve high returns. They are then introduced to a website that facilitates cryptocurrency trading and encouraged to invest based on the signals provided.

The fraud is revealed when the real game comes into play here. Scammers offer victims large loans or lines of credit to participate in some investment opportunities. These offers are usually made informally, via messaging platforms. To create the perception of legitimacy, investors are asked to provide sensitive financial information such as credit scores and sign fake loan documents.

If a victim does not accept a loan offer, scammers borrow cryptocurrency funds in the victim’s name through people posing as “helpers” and transfer the funds to the victim’s trading account. They also provide a screenshot of the transaction taking place. However, according to DFI’s findings, these transactions are actually fake. There are no records of “blockchain explorers” using blockchain technology. Despite this, victims are told that they can pay off this debt with the profits they make.

However, the real problem arises when you try to withdraw money from the platform. The victim’s account is frozen and he is asked to pay the loan out of his own pocket. If payment is not accepted, the scammers threaten legal action. DFI states that to date they have not received any report that any investor was able to withdraw their money by repaying the loan.

Another example of this method of fraud was reported by DFI with a $300,000 case. The victim had contacted the “Wealth Business School of Excellence and Innovation”, which claimed to be a financial institution but was used as a front for a cryptocurrency scam called ICHCOIN.

These types of scams, using fake professors and high-dollar loans, are becoming increasingly common in the cryptocurrency market. In order to avoid falling into such traps, investors need to obtain information from reliable sources and never make hasty decisions.

It is important to follow warnings issued by institutions such as DFI and report suspicious cases to the authorities. Remember, if an investment opportunity seems very attractive to you, it is probably not real.