Investment advice group chats used in suspected pump-and-dump schemes

How the scam works

• Scammers promote investment club group chats through social media. Often, the scammers will publish ads impersonating business leaders or financial commentators to promote the group chats. In some cases, the scammers send unsolicited invitations to the group chats through messaging platforms like WhatsApp. 
• In the group chats, an ‘investment mentor’ provides trade recommendations to group members. The group chats appear to have dozens of members, but they are populated primarily with bot accounts controlled by the scammers. 
• The scammers may initially recommend purchasing shares of a large, well-known company such as Nvidia or Tesla. This is a tactic to build trust before drawing potential victims into the pump-and-dump scheme. 
• Eventually, the scammers will recommend shares in a smaller company. Members are often encouraged to message the investment mentor or their assistant directly, who will guide them through the investing process.
• Over several weeks or months, the victims’ investments artificially inflate (or ‘pump’) the company’s share price. The scammers then sell (or ‘dump’) their holdings at the inflated price. When the share price collapses, victims are left bearing the loss. 
• After the share price drops and the victims suffer a loss, the scammers may tell investors they are entitled to compensation or reimbursement. The scammers may ask victims to complete an online form, provide copies of their ID, or pay an application fees in order to gain access to the funds. This is a recovery scam, and is an attempt to harvest victims’ personal information or extract further funds.