The co-founder of the crypto-focused VC firm Electric Capital, Avichal Garg, has warned investors over a potential disguised crypto scam.
The early-stage VC that raised $300 million for its third fund in September, is now being targeted by crypto scammers.
According to Garg’s warning, the perpetrators are masquerading as representatives of Electric Capital, setting up meetings. They then lure individuals to send money before investing, he added.
Unfortunately, scammers are pretending to be @ElectricCapital, setting up meetings, and asking people to send them money before investing.
Electric Capital will *never* ask you to send money before receiving an investment.
We will never reach out cold via Telegram. We almost…
— Avichal – Electric ϟ Capital (@avichal) November 27, 2023
“Ultimately this is a social engineering attack, so there will always be an angle the scammers will try to take. It will likely get worse in the height of the next bull market.”
Among crypto scams, social engineering attack is used to gain unauthorized access to sensitive data, crypto wallets and accounts. Such attacks include phishing mail, baiting, pretexting, among others.
Further, Garg stressed that the company would never ask users to send money in advance, before receiving an investment.
He clarified that the Palo Alto-headquartered firm has only limited official communication channels. “We only send emails from the electriccapital.com” domain, he said.
To prevent such impersonation, Electric Capital is working on additional verifications on social media channels, Garg further reassured investors.
A recent cyber threat intelligence report by financial advisory firm Kroll revealed that there has been an increase in social engineering scam tactics in 2023 compared to previous years.
Garg explained to users in another post that these scammers do actual diligence, disguising to be from Electric Capital. They then lure prospective victims to become limited partners (LP) in bogus “Electric” fund and ask them to send money.
“Once diligence is done and founder is an LP in Electric, they will get investment,” he added.
Since people are asking how the scam works:
– scammers pretend to be EC & do actual diligence (!)
– scammers tell the founder to become an LP into an “Electric” fund and to send money
– claim that once diligence is done and founder is an LP in Electric, they will get investment— Avichal – Electric ϟ Capital (@avichal) November 27, 2023
Garg’s warning comes shortly following a SIM swap attack on the smart contract security marketplace Code4arena’s X account, on Monday. Hackers posted a scam airdrop on its X account, which reportedly announced ARENA tokens airdrop endorsed by VC firm Paradigm.
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