Washington’s financial regulator has warned the public of an emerging crypto scam — where fraudsters pose as business “professors” to trick victims into depositing their hard-earned funds into a crypto scam or face “legal action.”

The “self-proclaimed professors” claim to be part of an “Academy,” “Business School,” or “Wealth Institute,” enticing victims with courses that can result in “exorbitant rates of return,” according to a July 16 statement by the Washington State Department of Financial Institutions (DFI). 

Victims typically come across the investment opportunity on a Facebook ad where they click the link and are met with a “Letter from the Professor” or “Letter from the Dean” on the company website.

Washington DFI said they’re then added to a WhatsApp or Telegram chat, usually with an arbitrary name such as “daily trading signals,” where these professors entice the victim with lucrative returns.

How the scam works

The fake academy will offer high-dollar loans or lines of credit for the investor to meet the capital requirements for a purportedly new, exclusive offering.

Investors are asked to provide personal details like their credit score or license and sign a loan document, making the offer seem all the more legitimate.

In some cases, even when the victim declines the offer, the professor’s “assistant” will borrow the funds — often in cryptocurrency — on behalf of the investor and deposit them into their account. They’ll often attach a screenshot to make it look real — but blockchain explorer sites show no transaction was ever made, the DFI notes.

Investors are initially told this loan can be paid off by the profits they accrue — but in reality, the company freezes their accounts and will begin threatening them with legal action until they repay the loan out of their own pocket, DFI said.

“When they are unable to do so, investors have received threatening messages from the company and/or collection letters claiming legal action will be taken against them.”

DFI said it hadn’t received a report where an investor successfully withdrew their funds by paying the loan back.

Related: Online pastor charged in ‘worthless’ crypto scam says God made him do it

In a similar incident, DFI reported complaints about “Excellence and Innovation Fortune Business School,” claiming to be a financial and investment-focused institution — but it instead lured victims into the ICHCOIN cryptocurrency scam.

Fake ‘professors’ use phoney loans to trick victims in latest crypto scam image 0 Redditor claiming they and their friends lost hundreds of thousands of dollars from ICHCOIN scam. Source: Reddit

The scammers even sent 500 Tether ( USDT ) for the victim to “test” the platform before they were eventually convinced to pull $300,000 out of their own pocket to invest in the scheme.

“The investor supposedly received a 450,000 USDT deposit into their ICHCOIN account. However, a review of the blockchain does not show a record of this transaction,” DFI observed.

This scam was also facilitated through WhatsApp , and investors were asked to provide personal details to sign a loan document.

“DFI urges consumers to exercise extreme caution before responding to any solicitation offering investment or financial services.”

Magazine: Meet the hackers who can help get your crypto life savings back