Pump-and-Dump Scam Uses Wealthsimple Branding to Defraud Canadians via Instagram Ads
Criminals are increasingly creating fake websites and online forums and impersonating reputable financial institutions, complete with stolen logos and branding, for ‘pump-and-dump’ schemes.
Ontario Victim Loses $260,000
An Ontario man, Israel Klait, has fallen victim to such a scam. After transferring his investments to Wealthsimple from a major Canadian bank through a legitimate promotional offer, Klait began seeing what appeared to be Wealthsimple ads on Instagram.
The ads promoted an online trading forum promising quick profits in the stock market. With Wealthsimple’s name and logo prominently displayed, the offer looked authentic.
An ad on Instagram using the logo of Wealthsimple for a ‘pump-and-dump’ scam
Klait joined the group and was encouraged to buy a stock. His first small investment doubled quickly, convincing him the advice was trustworthy. But when he made a much larger investment, things went badly.
As soon as he bought the stock that day, it tanked five minutes later. It went from $1.68 U.S. to ten cents. In total, he lost $260,000. When he tried to contact the forum, it was shut down—group chats deleted, phone numbers erased.
Wealthsimple Responds
A spokesperson of Wealthsimple stated, “Fraudsters are becoming more aggressive and sophisticated every day. We’ve seen a huge spike in social media scams, and we were very sorry to hear what happened to Mr. Klait. In the last three months, my team at Wealthsimple reported more than 10,000 fraudulent ads to Meta and we’re only one of many financial institutions fighting this issue”.
The company stressed that it never recommends specific stocks or securities and urged Canadians to be skeptical of any financial advice that promises quick riches.
BrokersView Reminds You
‘Pump-and-dump’ scams are designed to inflate stock prices, and then collapse them, leaving victims with worthless shares while scammers pocket the profits.
Investors are urged to verify all investment offers directly with financial institutions and treat any “get rich quick” promises as a red flag.
Know more ‘pump-and-dump’ schemes:
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