Washington State Accuses 2 Cryptocurrency Platforms of Defrauding Investors

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Two cryptocurrency platforms face allegations of fraud by Washington State’s Department of Financial Institutions. Both companies allegedly lured investors with promises of huge returns, but later blocked withdrawals and demanded extra fees. An investor lost $64,000 to one platform after being asked for a “safety reserve” fee. The platforms are accused of exploiting social media and messaging apps to target victims.

Washington State Targets Fraudulent Cryptocurrency Platforms

The Washington State Department of Financial Institutions’ Securities Division on Oct. 2, 2024, addressed fraud allegations against cryptocurrency platforms Nasdaqkk.cc and Sequoia-Platform. Both platforms are purported to have misrepresented their affiliations and lured investors into cryptocurrency investment schemes, promising substantial returns but blocking withdrawals.

In the case of Nasdaqkk.cc, an investor was approached via Facebook and subsequently invested $64,000. When attempting to withdraw funds, the investor received a “safety reserve alert” requiring an additional 15% fee to unfreeze their account. The investor refused to pay the fee and was left unable to access their money. DFI noted:

This appears to be what is commonly called ‘advance fee fraud.’ It also appears to be a common type of cryptocurrency investment scheme that uses social media groups.

The platform falsely claimed an affiliation with the Nasdaq Stock Exchange, which DFI confirmed is not involved in cryptocurrency trading.

Sequoia-Platform’s case involved an investor who learned of the investment from an online ad. The announcement details:

The investor learned of the cryptocurrency investment from an online advertisement. After learning of the investment, communication was moved to a messaging application such as Whatsapp or Telegram.

The investor, who invested $22,000 in bitcoin, was subjected to multiple fee demands but remained unable to withdraw funds. Sequoia-Platform threatened the investor with a lawsuit, and law enforcement has since seized its domain. DFI again warned consumers to verify any investment professionals’ licenses and urged caution when engaging with unfamiliar entities.

What do you think about these cryptocurrency fraud cases and the role of social media in these scams? Let us know in the comments section below.

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