BISMARCK — The North Dakota Securities Department is warning the public about a new investment scam involving fake “investment education foundations” that lure investors with promises of education on stocks and cryptocurrency with "risk-free" trials and loans.
According to state securities commissioner Tim Karsky, the main goal of the scammers is to persuade investors to invest money into the platform and take out fake loans, which included exorbitant commissions. He said the scams will likely promise guaranteed returns and sophisticated advice.
"The rise of fake 'investment education foundations' is a concerning trend that preys on investors' desire to reduce the risk of investing in cryptocurrency," said Karsky. "It’s crucial for investors to remain vigilant and skeptical of unsolicited offers before handing over their money."
A release from the Securities Department explained the scam, saying it typically starts with social media ads that lead to WhatsApp groups managed by a fake "founder" and bots, which provide investment lessons, eventually introducing a fraudulent cryptocurrency exchange. Investors are enticed to test a proprietary AI bot with “free” tokens, which generate fake profits, leading them to make real money investments.
Fake providers on Telegram offer loans deposited directly onto the exchange for those who don't have enough available funds, but investors aren't able to withdraw profits until they repay these fake loans or commissions, and their accounts are frozen for fake regulatory reasons.
The scammers legitimize their operations using real government and professional documents, including registration with the U.S. Department of the Treasury and the U.S. Securities and Exchange Commission, the release said. They may also post articles online to appear legitimate and use old website domains to appear established.
The North Dakota Securities Department urged investors to exercise caution before responding to unsolicited investment offers, especially those received through social media, emails or phone calls.
Karsky said people should contact the state Securities Departmen t to check to see if a so-called "education foundation" or a cryptocurrency exchange is registered before making any kind of investment or taking out a loan.
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