The Washington State Department of Financial Institutions (DFI) has received a complaint from a Washington resident regarding TokenSwap.net (“TokenSwap”), a website purporting to be a cryptocurrency exchange and investment platform.
The victim told DFI that he received a text message from a woman named “Lina” after participating in an online chatroom on the topic of cryptocurrency/FOREX. The two texted for several months, becoming quite friendly. After some time, Lina shared with the victim that she had successfully made $300,000 in a matter of weeks, investing in cryptocurrency through TokenSwap. At Lina’s direction, the victim, created a wallet with Crypto.com, exchanged USD to Etherium, and then transferred the Etherium to a TokenSwap wallet. Once the funds were at TokenSwap, the account was managed through a TokenSwap application downloaded from the Apple app store.
Lina then directed the victim on how to make “investments” by buying, holding, and selling tokens over short periods of time. In a few weeks, the TokenSwap account was showing an initial investment of $30,000 growing to $350,000.
When the victim attempted to withdraw monies from the account, he was met with demands for additional fees—taxes, security deposits, and late fees. Trying to access his funds, the victim ultimately sent an additional $170,000 in fee payments to TokenSwap—for a total loss of $200,000. These allegations have not been verified by DFI.
Investment fraud involving cryptocurrency, known as “Pig Butchering,” is on the rise—fraudsters connect with victims on the internet and, after gaining their trust, entice them into investments on websites and apps that show fictitious returns, encouraging additional investments. When victims try to withdraw proceeds, they are met with various additional fees that must be paid in advance of withdrawal. Even after making further payment, the victim is ultimately unable to cash out or withdraw any funds. For more information on these frauds, check out the following:
DFI urges consumers to exercise extreme caution before responding to any solicitation offering investment or financial services. Investment professionals need to be licensed with DFI to offer investments to Washington residents. In addition, most investment products sold need to be registered with DFI. To check the licensing status and to find out if there are any complaints against an investment professional or investment product, please visit FINRA Brokercheck or contact the Washington State DFI, Securities Division at (360) 902-8760. If you live outside of Washington State, contact your state securities regulator.
If a consumer believes a person or company has violated state law or acted improperly regarding an investment product or service, they may file a complaint with the Securities Division.