Oregon Division of Financial Regulation warns of fake crypto apps, websites that will steal your money

December 27, 2022
The Oregon Division of Financial Regulation (DFR) advises cryptocurrency investors to do their homework before giving money to a cryptocurrency trading platform.

Many cryptocurrency exchange apps or websites are actually fake platforms created by scammers to take money from investors and give nothing back. Investors are promised large profits in a short period of time and will see account balances rise rapidly, but will not be able to withdraw funds without having to deposit more money in “withdrawal fees” or “taxes”. The scammer will continue to charge these fees until an investor becomes suspicious. After that, the account is emptied and the scammers disappear, along with the investor’s funds. Before transferring money to a cryptocurrency exchange website or app, research the company and web address to make sure it is legitimate.

Scammers will also look for opportunities to re-victimize those who have already been harmed and are trying to find ways to recoup their losses. For example, a recent scam involved a website claiming to be run by the US State Department and claiming that it was working to get FTX clients’ assets back to them, following the collapse of FTX (read more about the FTX crash). The website requested the investor’s FTX username and password, along with other account information. The United States Department of State did not create this website. Be aware that if someone contacts you asking for usernames and passwords for their accounts, it is most likely a scam.

“The cryptocurrency trading market is fluid and full of people trying to take advantage of you,” said TK Keen, an administrator at DFR. We’ve said this before, but if it sounds too good to be true, it probably is. We encourage everyone to do their homework and invest wisely, and be diligent in protecting their usernames, passwords and other sensitive data.”

According to the North American Securities Managers Association, there are many common schemes that scammers exploit as new products or investment opportunities. Some of them are:

  • Fake Digital Wallets – A digital wallet is used to store, send, and receive cryptocurrency. Scammers design a fake digital wallet to lure users into providing their private key or the code that opens the wallet. Once the scammers receive the private key, they can steal all the cryptocurrency from the owner’s digital wallet.
  • Pump-and-dumps: Groups of people coordinate to buy a little-traded cryptocurrency, promote the cryptocurrency on social media to increase demand and price, and then sell it in a coordinated sale. The price plummets and those unaware of the scheme are left with the devalued cryptocurrency.
  • Multi-Level Marketing Platforms: Companies lure investors with the promise of high interest with low risk. These investors are then incentivized to recruit more members.

“A lot of these seem obvious after the fact, but there’s a lot in this industry that looks and sounds legitimate,” Keen said. “Unfortunately, there are a lot of people in the crypto space that are just looking to take advantage of you. If you believe you are the victim of a crypto-related scam, we encourage you to file a complaint with our office.”

For more information on how to file a complaint, go to the DFR website.

About Oregon DFR: The Division of Financial Regulation is part of the Department of Consumer and Business Services, Oregon’s largest business regulatory and consumer protection agency. To visit dfr.oregon.gov Y www.dcbs.oregon.gov.