fraud_alert

Shanghai authorities have successfully cracked down on a large-scale cryptocurrency fraud operation that disguised itself as a network of so-called “cryptocurrency trading masters.” The group allegedly lured victims into leveraged trading schemes that led to forced liquidations, resulting in significant financial losses.

According to an announcement from the Shanghai Procuratorate’s official account, the Shanghai Public Security Bureau arrested multiple suspects involved in the operation. Investigations revealed that the group had formed collusive agreements with several virtual currency “investment and wealth management” platforms. Together, they created a profit-sharing model where the scammers received commissions based on the losses incurred by clients.

Driven by profit, the gang launched a coordinated and meticulously planned scam. Certain members were tasked with publishing low-cost virtual currency exchange advertisements on social media platforms, online forums, and financial discussion groups. The ads served as traps for unsuspecting investors, promising high returns and professional trading guidance.

Once a victim responded, another team member — posing as an “investment mentor” or “crypto expert” — would engage in prolonged communication to build trust. These individuals fabricated credentials, shared fake profit screenshots, and staged discussions that gave an illusion of insider expertise. Over time, they convinced victims to increase their leverage or deposit additional funds on manipulated trading platforms that were under the scammers’ control.

The fake mentors would then encourage victims to hold positions longer, deliberately leading to liquidation events. Each time a user lost money, the fraudsters received a share of the proceeds through their arrangements with the partnered trading platforms.

Authorities reported that the group operated across multiple online channels, using psychological manipulation and social engineering to maintain prolonged contact with victims. Many investors believed they were following legitimate trading advice from industry professionals until their entire balances were wiped out.

Shanghai prosecutors have confirmed that the case involves a complex network of participants, including platform operators, “trading advisors,” and data manipulators. Evidence collection is ongoing, and further legal proceedings are expected to follow.

The incident highlights growing concerns about fraudulent schemes in the crypto investment space, particularly those leveraging the rise of social media influencers and online trading communities. Law enforcement officials have reiterated that legitimate investment advice should always come from licensed institutions, and warned the public to avoid sending funds to unknown private wallets or platforms claiming guaranteed returns.

From a broader perspective, this case underscores the evolving nature of financial fraud in the digital asset sector — blending traditional deception tactics with the anonymity and borderless reach of blockchain markets.
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●In a fascinating twist on digital deception, scammers are flipping the script by targeting dishonest crypto enthusiasts with a new bait-and-switch strategy. According to a Dec. 23 blog post by Kaspersky analyst Mikhail Sytnik, fraudsters are posing as inexperienced users and sharing seed phrases of cryptocurrency wallets online. But these wallets, which appear to contain significant funds, are carefully crafted traps designed to outsmart would-be thieves.
One such wallet highlighted by Kaspersky reportedly held $8,000 in USDT on the Tron network. Scammers posted its seed phrase in YouTube comments under finance-related videos, claiming they needed help transferring the funds. Unsuspecting opportunists were lured into sending Tron (TRX) to the wallet to cover transaction fees, expecting to access the USDT.
However, these wallets are configured as multisignature wallets, requiring approvals from multiple parties to complete any transactions. Once the TRX is sent, it’s instantly transferred to the scammers' wallets, leaving the would-be thieves empty-handed and out of pocket.
Sytnik described these scammers as “digital Robin Hoods,” targeting those attempting to profit dishonestly. He warned against trying to access wallets using publicly shared seed phrases and urged caution when engaging with cryptocurrency-related claims online.
This isn’t the first scam to exploit opportunistic individuals. In July, Kaspersky uncovered a similar scheme on Telegram, where users were baited with fake vulnerabilities in crypto exchanges. That ploy aimed to install malware, leading to the theft of sensitive data and assets.
The lesson? Whether you’re a novice or a seasoned crypto user, greed can cloud judgment and lead to costly mistakes. In the fast-paced world of digital currencies, caution and integrity remain the best defenses against scams.
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