HOW DIGITAL ASSET EXCHANGE SCAMS WORKS
Digital assets include convertible virtual currencies and cryptocurrencies such as Bitcoin, stablecoins, and non-fungible tokens.
There are a growing number of people who are being approached by digital asset exchange scammers on popular social media outlets like LinkedIn. The scammers are skilled in how they target their victims. They learn about their victims’ personal lives by searching social media accounts and publicly available open-source information. They use this information to strike up online conversations and make victims believe they have a lot in common. Scammers prefer apps like WhatsApp, Telegram and WeChat to speak with victims.
Scammers tell victims that their digital asset exchange transformed them into multimillionaires. They persuade victims to sign on with the exchange and invest a modest amount of money. When victims check their account balances a few days later and see impressive gains, the scammers encourage further investment with the ultimate goal of stealing all of the money.
HOW TO PROTECT YOURSELF
- If someone you do not know calls you or sends you a message via social media, email or text, hang up or delete the message and report it as junk. Do not respond.
- If you are interested in trading on a digital asset exchange, first do your homework by verifying whether the company is legitimate. Check with government authorities responsible for regulating the company. An exchange is also considered a money service business and, therefore, must be registered. You can check whether it is registered at fincen.gov/msb-state-selector. If the company isn’t registered, avoid it.
- Check to see if the company has a physical address. If it does, run an online street-view map search. If it has no street address or the street address search doesn’t match up to what you would expect to find (e.g., it’s an abandoned lot), avoid it.
- Does the company have a working customer service number? If it doesn’t, avoid it.
- The exchange may claim to be in business for a significant time. To verify, search the company’s web address at lookup.icann.org. If the company was registered just a few weeks ago (as opposed to years), it’s likely a scam.
- If the company’s website won’t accept transfers from your bank, but rather insists that you convert dollars to cryptocurrency first and then transfer the crypto to them, it is likely a scam.
- If the company claims its investments are risk free and/or it guarantees you investment returns based on how much you invest (e.g., the more you invest the larger your guaranteed rate of return), it is likely a scam. No one can guarantee a rate of return on investments and basing your returns on the amount you invest is a sure red flag of fraud.
WHAT ELSE CAN YOU DO? If you believe you are the victim of a digital asset exchange scam, you can contact the DISB Enforcement and Consumer Protection Division at 202.727.8000. You may also contact the Secret Service at [email protected], or the Metropolitan Police Department’s Financial and Cyber Crimes Unit at either 202.727.4159 or [email protected].
DISB Mission
Our mission is three-fold: (1) cultivate a regulatory environment that protects consumers and attracts and retains financial services firms to the District; (2) empower and educate residents and (3) support the development and expansion of business.