Avichal Garg, the co-founder of Electric Capital, a crypto-focused venture capital (VC) firm, has issued a warning to investors about a potential crypto scam involving his firm. Electric Capital, which recently raised $300 million for its third fund in September, is reportedly being targeted by scammers. Garg alerted that the fraudsters are posing as representatives of Electric Capital and arranging meetings with individuals. During these meetings, they lure victims into sending money with the promise of investment opportunities. Garg’s warning serves as a cautionary note to investors to remain vigilant and verify the authenticity of communication from investment firms.
Avichal Garg emphasized that the reported scam is a form of social engineering attack and noted that such incidents may escalate during the peak of the next bull market. Social engineering attacks involve manipulating individuals to gain unauthorized access to sensitive information, crypto wallets, and accounts, often employing tactics like phishing, baiting, or pretexting.
Garg made it clear that Electric Capital would never request users to send money in advance before receiving an investment. He also specified that the firm primarily communicates through emails from the “electriccapital.com” domain.
To counter impersonation attempts, Electric Capital is implementing additional verifications on its social media channels to enhance security and reassure investors.
Fund Falsely Represented as “Electric”
According to a recent cyber threat intelligence report by financial advisory firm Kroll, there has been an increase in social engineering scam tactics in 2023 compared to previous years.
Avichal Garg elaborated in another post, explaining that scammers are conducting actual due diligence and posing as representatives of Electric Capital. They deceive prospective victims by persuading them to become limited partners (LP) in a fictitious “Electric” fund and request them to send money. Garg clarified that once the due diligence is completed, and the founder becomes an LP in “Electric,” they are promised an investment.
Garg’s warning follows a SIM swap attack on the smart contract security marketplace Code4arena’s X account, where scammers posted a fraudulent airdrop announcement endorsed by VC firm Paradigm. This incident underscores the need for vigilance in the crypto space to counter various forms of scams.