Washington State warns of crypto fraud after investor loses $750,000

The Washington State Department of Financial Institutions (DFI) has issued a warning about potential cryptocurrency fraud following a case where an investor lost over $750,000. 

The warning comes after a Washington-based investor was scammed through a fraudulent cryptocurrency mining platform and wallet. 

The incident highlights the risks associated with unverified financial offers in the digital asset space.

According to the DFI, the investor was approached online by someone named "Frank" who persuaded them to invest over $300,000 into a platform called "Halo" to mine stablecoin Tether (CRYPTO:USDT). 

Initially, the investment seemed successful, allegedly growing to $1.4 million. 

However, when the investor attempted to withdraw their funds, they faced multiple demands for additional taxes and fees. 

These included over $65,000 upfront for "withheld taxes" and another $50,000 in fees through a "Bitkeep" wallet, which had changed names several times.

Despite complying with these requests, the investor was unable to withdraw their funds. 

Frank then demanded two ETH (CRYPTO:ETH) as a recovery fee, which resulted in the investor losing even more money. 

Altogether, the investor's losses amounted to more than $750,000. 

In a statement, the DFI revealed that the victim had to liquidate their 401(k) retirement account, borrow from family, and max out credit cards to meet the escalating demands.

The DFI has not yet verified the legitimacy of the platforms and wallets involved in this case. 

The regulator is urging consumers to exercise caution when dealing with unsolicited financial offers and to thoroughly investigate the licensing status of investment professionals through FINRA BrokerCheck or state regulators. 

Those who believe they have been scammed are encouraged to file a complaint with the DFI Securities Division.

The regulator emphasised that "investment professionals need to be licensed with DFI to offer investments to Washington residents. In addition, most investment products sold need to be registered with DFI."