The wolves are circling, dressed in digital sheep’s clothing. Across social media platforms, sophisticated scammers are deploying fake “Investment Education Foundations” that promise to teach everyday people the secrets of crypto wealth. It’s a lie.
These operations add victims to WhatsApp groups populated with “founders” and AI bots masquerading as successful investors, creating an illusion of legitimacy and community.
These scammers aren’t amateurs. They purchase aged domains, file actual government paperwork, register as Exempt Reporting Advisers with the SEC, and even obtain Money Services Business status with FinCEN. All to look legitimate. All to steal your money.
The playbook is predictable yet effective. First, they teach basic investment concepts. Next, they introduce their “proprietary” trading platform. Then comes the hook: free tokens to test their miraculous AI trading bot. No risk! Except there is.
The scammer’s formula: Educate, introduce, bait, hook. A well-rehearsed dance leading straight to your wallet.
Once victims see fake profits accumulating, they invest real money. Try to withdraw? Sorry, you need to pay unexpected “taxes” first. Or “fees.” Or repay “loans” you never took. Some victims even face having their accounts frozen under false regulatory claims, requiring additional payments to supposedly unfreeze them. Some victims even receive threats of violence from supposed “local gangs” working as collectors. Nice touch.
The numbers are staggering. The FBI reports $5.6 billion lost to crypto scams in 2023—a 45% increase from the previous year. Nearly 70,000 complaints filed. Investment scams accounted for 71% of all crypto-related losses. Seniors are particularly vulnerable to these schemes, with individuals over 60 reporting the highest losses totaling over $1.65 billion.
California’s Department of Financial Protection and Innovation has received 2,668 complaints this year alone, uncovering $4.6 million in losses. The timing of these scams often coincides with bear market conditions when investors are especially vulnerable due to fear and uncertainty about declining crypto values. Their Department of Justice has already taken down 42 scam websites. The average victim loses $146,306. Not exactly pocket change.
Regulators are scrambling. The North American Securities Administrators Association has issued alerts. California warned about seven new crypto/AI scam types emerging in 2024 alone.
Remember: guaranteed high returns don’t exist. Pressure to invest quickly is a trap. Difficulty withdrawing funds is the biggest red flag of all.
The crypto landscape is treacherous enough without these predators. Their “education” comes with a tuition no one can afford.
