From cointelegraph by Tom Mitchelhill

Scott Pape, an Australian financial educator known as the “Barefoot Investor,” has spoken out about how he took on crypto fraudsters who stole his identity to scam his followers.

The Australian reported on Dec. 23 that Pape said he and his team had been reporting hundreds of fake Facebook groups that had been imitating his likeness in a bid to dupe people into taking part in scams. 

Instead of waiting for Facebook to remove the groups — which could see the scams proliferate in the interim — Pape decided to engage with the scammers and detail the process of what they do.

It began with Pape engaging with scammers on Facebook under a fake name and asking for investment help.

Shortly after he’d made contact with a fraudulent Facebook page, he was asked to provide his phone number and was invited into an “exclusive” WhatsApp group called the “DB Wealth Institute.” 

Pape said he did a quick Google search of DB Wealth Institute and found a series of automated press releases about the “investing firm,” some of which had been syndicated to Yahoo Finance, Forbes, and LinkedIn.

“DB Wealth Institute, founded in 2011 by Professor Cillian Miller, offers practical financial training and developed ‘AI Financial Navigator 4.0,’ integrating AI with big data to enhance trading strategies. By 2024, it had trained over 30,000 students from more than ten countries,” read one of the press releases. 

Pape said that further research revealed that many US regulators and financial watchdogs had warned of fake “wealth institutes” promising crypto trading lessons via WhatsApp.

In these types of scams, a “professor” provides fake trading signals for the group members to pile their money into while an assistant communicates with investors. Once enough money is gathered, the group vanishes with it all, rebrands, and targets new victims.

Pape said his phone notifications quickly began buzzing off the hook, with over 200 messages in the WhatsApp group every day from a swarm of users posting their various successes in crypto trading. 

“At 11 am each day, the Professor would give his trading signals. You were encouraged to post screenshots of your winnings in the WhatsApp group, which people did all day and all night. I suspected they were bots,” Pape said. 

Pape said he was advised by an assistant called “Ally” to take a 100X long trade on an altcoin using the “trade signals” from the professor. He did it and made an 81% profit in 10 minutes. 

“There are three steps that make up these scams: the first step is confidence. The second step is greed. And the final — and most lucrative of all for the scammers — is fear.”

After making some money, Pape said the scammers quickly “went in for the kill,” with the assistant Ally sending him hundreds of messages asking him how much he had to invest and advising him to take out a loan to join one of their exclusive investing programs. 

Related: DeFi rug pull surge reveals more complex crypto scam strategies

“A few days later, the Professor unveiled their ‘partner programs’ based on how much you were willing to invest. It started at $20,000 and went all the way up to $5 million,” he wrote.

But this is where Pape pulled the pin, saying he’d learned from experience — through helping other scam victims in the past — that this is exactly how these kinds of scams work.

“Once you realize you’ve been robbed, scammers prey on your desperation, often convincing you to borrow money to ‘recover’ your losses,” he said.

“It’s a little-known fact that the biggest losses happen after you realize you’ve been scammed.”

Pape is the best-selling author of the Australian-focused investing and finance book The Barefoot Investor, which has since become his online moniker. 

Crypto scams, exploits, and hacks have been on the rise in 2024, with a recent report from blockchain surveillance firm Chainalysis revealing that $2.2 billion had been lost to scams and hacks in 2024, a 21% increase from $1.8 billion in 2023.