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The Trap Tightens During Withdrawals

Problems surfaced when investors tried to withdraw their funds. Instead of processing withdrawals, the scammers demanded additional “fees” or charges, claiming they were required to unlock profits or complete transactions. These extra payments only increased investor losses, with no chance of recovery.

The SEC alleges that the stolen funds were moved overseas through a network of bank accounts and crypto wallets, making recovery even more difficult.

SEC Warns of a Growing Trend

The regulator described the case as a textbook example of an “investment confidence scam,” a tactic that is becoming increasingly common in the digital asset space. SEC officials emphasized that fraudsters are exploiting social media, private group chats, and the hype around AI and crypto to appear legitimate.

Alongside the charges, the SEC issued a fresh warning urging investors to be cautious of unsolicited investment advice, especially in messaging apps. The agency advises verifying anyone offering investment opportunities through official channels like Investor.gov.

The case serves as a reminder that if an investment opportunity relies heavily on private chats, guarantees quick profits, or asks for extra fees to access funds, it’s often a major red flag.

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FAQs

What is an investment confidence scam in crypto?

It’s a scam where fraudsters build trust over time using fake success stories and guidance, then persuade victims to invest on bogus platforms.

Are legitimate crypto investments promoted through private group chats?

Rarely. Legitimate firms don’t rely on WhatsApp or Telegram groups for investments or pressure users with time-limited offers.

What are common red flags of fake crypto platforms?

Guaranteed returns, no verifiable license, withdrawal fees, unclear ownership, and pressure to reinvest are strong warning signs.

What should investors do if they suspect a crypto scam?

Stop sending funds immediately, document all interactions, and report the case to regulators or cybercrime authorities promptly.