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Washington DFI issues public alert on Ethfinance over alleged fee fraud

source-logo  crypto.news 14 June 2024 08:44, UTC

The Washington State DFI has issued a public alert over an alleged $310,000 crypto scam scheme involving a crypto exchange.

The Washington State Department of Financial Institutions (DFI), Securities Division, has received a complaint after an investor failed to withdraw $310,000 worth of crypto from Ethfinance, an alleged crypto trading platform. In a Jun. 13 press release, the DFI says an investor — whose identity remains unclear — was introduced to Ethfinance “through a random friend request on LinkedIn.”

“The investor transferred a total of approximately $310,000 using his defi [decentralized finance] wallet to Ethfinance as he thought he would earn a large profit from trading in cryptocurrency.”


When the investor attempted to withdraw some of his initial principal and purported profits, he was directed by Ethfinance’s customer service department — communicating through the Telegram messenger — to add more funds to complete a “smart contract” before he could withdraw any money, the DFI says. The investor refused to send additional funds and has since been unable to access his account, which is now locked.

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The regulator noted it hadn’t verified the allegations but warned that the case resembles an “Advance Fee Fraud,” where scammers demand upfront payments for promised services or gains that never materialize.

According to the U.S. Securities and Exchange Commission, such schemes often lure victims by promising high returns on investments and then require the payment of fees or taxes before any supposed earnings can be withdrawn.

In addition to Ethfinance, the DFI issued public alerts against crypto trading platforms WTOCoin and Foundation-coin, stating that these platforms also appear to be luring victims into depositing crypto and then denying them access to withdraw it.

The DFI urged consumers to exercise extreme caution before responding to any solicitation offering investment or financial services, adding that investment professionals must be licensed with DFI to offer investments to Washington residents.

Read more: Coin Cafe ordered to repay users $4.3 million in alleged fee scam