A new type of online scam uses fake cryptocurrency investment education foundations to fleece investors with bogus investments and loans, state officials warn.
The Tennessee Department of Commerce & Insurance Securities Division and North Dakota Securities Department both recently detailed the scams in news releases.
The scammers typically set up fake “investment education foundations” that offer education on stocks and cryptocurrency, “risk-free” trials, and loans. The scammers con investors to put their money into the platform, take out fake loans, and pay exorbitant commissions, officials alleged.
“The rise of fake ‘investment education foundations’ is a concerning trend that preys on investors’ desire to reduce the risk of investing in cryptocurrency,” Tennessee state Department of Commerce & Insurance Commissioner Carter Lawrence said in a release. “These scams are designed to deceive. It’s crucial for investors to remain vigilant and skeptical of unsolicited offers before handing over their money.”
Investors who are lured into the group get investment lessons from the founder, who eventually introduces a fraudulent cryptocurrency exchange. Investors are encouraged to test a proprietary AI bot with “free” tokens that generate fake profits. That induces the investors to put in real money, authorities said.
For those without funds to invest, fake loan providers offer loans deposited into the exchange. Investors are told that they can’t withdraw their “profits” until they repay the fake loans or commissions, and that the accounts are frozen for fake regulatory reasons.
The scam is eventually shut down and restarted under new names, according to officials.
To give the appearance of legitimacy, the scammers often use real government and professional documents, including registration with the U.S. Department of the Treasury and the SEC, and may post online articles and use old website domains.
The state officials are urging investors to be wary about unsolicited investment offers, especially those sent though social media, emails, or phone calls.
“Do not assume an education foundation is trustworthy just because it is promoted on social media,” Tennessee Assistant Commissioner for Securities Elizabeth Bowling said in a release. “Instead, if you have questions, you should contact our team to check if the education foundation and cryptocurrency exchange are registered.”
