Ethfinance fee scam sees $310k lost, Washington DFI issue alert

on Jun 14, 2024
  • A trader lost $310,000 after being lured to the fraudulent crypto platform Ethfinance.
  • The scam involved a suspicious request for additional funds to unlock withdrawals.
  • Two other platforms have been flagged by the DFI over similar accusations.

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A fraudulent cryptocurrency exchange has duped a trader out of $310,000. The Washington State Department of Financial Institutions (DFI) Securities Division has issued an alert in this regard.

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According to the June 13 warning, the victim was approached via LinkedIn. A random connection request introduced the victim  to the dubious crypto trading platform called “Ethfinance.”

Random connection request leads to losses

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Upon learning about the platform, the investor, whose identity remains undisclosed, transferred $310,000 from his “DeFi wallet.” The idea was to make some lucrative gains from the investment.

However, when attempting to withdraw some of the principal amount and profits, he was confronted by a suspicious request. 

Allegedly, the platform’s customer service department had reached out to the investor via the messaging app Telegram. The representative requested the investor to add more funds to unlock withdrawals.

“The investor did not send any additional funds,” the DFI warning noted, adding that “his account is locked.”

While the watchdog said it hadn’t verified the allegations, the warning labelled the incident as an  “Advance Fee Fraud.”

The scheme typically involves scammers convincing users of significant returns for a small upfront investment. Subsequently, they demand additional fees from the user for various other reasons or disappear with the funds.

Past complaints

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The Washington DFI also saw another complaint about Ethfinance from a California resident earlier. 

The individual allegedly lost $165,000 to a stranger he met online. The stranger promised to teach him crypto options trading.

What caught the attention was that the investor was contacted by someone claiming to be the “CEO of Crypto Customer Service” on Telegram.

The investor was asked to send 25% of the profits as “taxes” to finish the withdrawal process.

Besides Ethfinance, the DFI has also flagged WTOCoin and Foundation-coin for similar reasons. Both platforms have been accused of drawing in investors and ultimately placing a lock on their funds.

The regular has urged “extreme caution” when interacting with any individual offering similar schemes. It added that all financial services or advisors must be licensed with the DFI to offer services.

The warning comes as fraudulent activities have continued to plague participants in the cryptocurrency sector.

Last week, scammers hijacked multiple YouTube channels to promote crypto scams, posing as billionaire Elon Musk.

As previously reported by Invezz, scams and hacks have drained $19 billion from the sector over the past 13 years. 2022 was marked the costliest year in crypto, with $4.2 billion drained.

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