Electric Capital Raises Alarm on Crypto Scams Targeting Entrepreneurs

Electric Capital, a prominent venture capital firm, has warned about a sophisticated scam operation targeting potential investors.

Avichal Garg, Co-Founder and General Partner of Electric Capital, revealed in a recent post the alarming tactics being employed by scammers.

Electric Capital Exposes Sophisticated Crypto Scam

According to Garg, the fraudsters are masquerading as representatives of Electric Capital, orchestrating meetings and deceitfully persuading individuals to send money in advance of investments.

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

Highlighting the severity of the situation, Garg emphasized, “Electric Capital will never ask you to send money before receiving an investment.”

He clarified that the firm does not engage in cold outreach via Telegram and typically contacts people through mutual acquaintances. Garg further noted that all Electric Capital employees are connected to him on LinkedIn, offering an additional layer of verification for cautious investors.

He also pointed out that the firm’s official communication channels are limited to emails sent from their verified domain, electriccapital.com, further reassuring investors that efforts are underway to enhance email security and verification on social media channels to prevent impersonation.

Scammers Mimic Electric Capital’s Procedures to Dupe Investors

A major point of concern is the approach used by these scammers. According to Garg’s statement, these scammers are employing social engineering techniques to establish trust and credibility. They go as far as conducting thorough due diligence, mimicking Electric Capital’s standard operational procedures.

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

The strategy is to persuade prospective victims to become limited partners (LPs) in a fund falsely presented as “Electric.” These individuals are then directed to transfer funds with the assurance of receiving investments once they are officially onboard as LPs.

According to Kroll’s Q3 Cyber Threat Intelligence report, there has been an increase in social engineering tactics, including phishing, smishing valid account exploitation, and voice phishing, leading to the highest volume of incidents observed in 2023.

The rise in such scams is a concerning trend in the crypto space, particularly as the market is expected to become even more attractive during the next bull run.

Garg advises individuals to be vigilant and verify the authenticity of any communication supposedly from Electric Capital in light of these developments.