Olympia – The Washington State Department of Financial Institutions (DFI) Securities Division joins the North American Securities Administrators Association members in warning the public about a new investment scam involving fake “investment education foundations.” These fake foundations lure investors with promises of education on stocks and cryptocurrency, "risk-free" trials, and loans. The main goal of the scammers is to persuade investors to invest their own money into the platform as well as take out fake loans, paying exorbitant commissions.
"The rise of fake 'investment education foundations' is a concerning trend preying on investors' desire to reduce the risk of investing in cryptocurrency," DFI Director Charlie Clark said. "These scams often promise guaranteed returns and sophisticated advice, but they are designed to deceive. It’s crucial for investors to remain vigilant and skeptical of unsolicited offers before handing over their money."
The scam typically starts with social media ads leading to messaging app groups managed by a fake founder and bots. The founder provides investment lessons, eventually introducing a fraudulent cryptocurrency exchange. Investors are enticed to test a proprietary AI bot with “free” tokens, which generate fake profits, leading to real money investments. If funds are lacking, fake loan providers on the messaging app offer loans deposited directly onto the exchange. Investors can’t withdraw profits until they repay these fake loans or commissions, with accounts frozen for fake regulatory reasons. The scam is eventually shut down and often restarted under new names.
Scammers legitimize their operations using real government and professional documents, including registration with the U.S. Department of the Treasury and the Securities and Exchange Commission. They may also post articles online to appear legitimate and use old website domains to seem established.
How to Protect Yourself from Investment Fraud
DFI urges investors to exercise caution before responding to unsolicited investment offers, especially those received though social media, emails, or phone calls.
“Don’t assume an education foundation is trustworthy just because it is promoted on social media,” Clark noted. “Contact DFI to check if the education foundation and cryptocurrency exchange are registered.”
If you suspect fraud or illegal activity, reach out to DFI immediately. For additional tips and resources, visit DFI’s informational pages on Investment Fraud and Financial Scams and Fraud. You may also wish to sign up to receive our Consumer Alerts.