How to avoid cryptocurrency scams – warning from the Wisconsin Department of Financial Institutions

Wisconsin Department of Financial Institutions Warns of Cryptocurrency-Related Scams

The Wisconsin Department of Financial Institutions (DFI) is addressing the increasing threat of financial and investment scams, especially those related to cryptocurrencies, by launching a special tool to track and identify fraudulent schemes. The initiative aims to protect investors from losses resulting from the activities of criminals who exploit the interest in digital assets to deceive unsuspecting individuals.

Warning Against Financial Scams

From January 2022 to June 2024, Wisconsin residents reported losses exceeding $3.5 million due to various financial scams, including fraudulent investment schemes involving cryptocurrencies. A significant issue is the so-called “piggybacking schemes,” which have enormous consequences for those who fall victim to scams.

Threat to Investors

DFI Secretary Cheryll Olson-Collins emphasized that scammers are increasingly using the complex nature of cryptographic assets to manipulate Wisconsin’s most vulnerable residents at risk of fraud. Fraudsters seek to gain the trust of their victims to later extort significant amounts of money from them. Often, scammers impersonate reputable investment firms, enticing victims with promises of high profits in a short period.

Fraud-Tracking Tool

The new tool provided by DFI allows Wisconsin residents to search for company names, types of scams, and keywords related to fraudulent schemes. The tool also includes FAQs, an investment glossary, and links to additional resources aimed at increasing awareness and education regarding investment fraud.

Recommendations for Investors

Olson-Collins strongly advises residents to exercise caution in making investment decisions, especially when it comes to transactions involving cryptocurrencies. She urges people to avoid giving money or access to bank accounts to individuals met online and warns against depositing funds in suspicious and unverified investments. In the face of increasingly sophisticated scams, exercising extreme caution and healthy skepticism towards promises of quick profits is crucial.

Verification of Investment Firms

DFI urges all potential investors to thoroughly verify the companies they intend to work with using trusted sources of information. In light of the growing number of cases of firms being impersonated, where scammers pretend to be legitimate entities, confirming authenticity before taking any investment actions becomes particularly essential.

Any suspicious activities or attempted fraud can be reported to the appropriate regulatory authorities for preventive action and protection against financial losses.