"You’ll make money on first couple of trades...": Zerodha's Nithin Kamath warns of a new scam

Zerodha co-founder Nithin Kamath has flagged the rapid rise of fake trading apps that lure users with the promise of easy profits, only to disappear with their money. 

In a post on X, Kamath explained how these scams are sophisticated enough to fool even the most cautious investors.

“These fake trading app scams have exploded and have become a mega nuisance,” Kamath wrote, explaining that the scam typically begins with victims being added to WhatsApp groups where they are persuaded to install apps that closely mimic those of legitimate brokers.

Kamath outlined the process: Initially, these apps allow users to make small profits, creating the illusion of easy money. Once the victim is convinced, they are asked to transfer more funds to continue trading. However, when they attempt to withdraw their earnings, they are asked to pay upfront fees, supposedly for taxes and other charges. At this point, the scammers vanish, taking the invested money with them.

“Always remember, if something is too good to be true, it almost always is. It's important to be skeptical about claims of easy money,” Kamath warned.

A Mumbai man recently lost ₹90 lakh after falling victim to a WhatsApp group promising expert investment advice. The scam began when the victim was added to a WhatsApp group claiming to offer insider tips for quick profits in stock trading. Posing as "foreign experts," the group seemed credible, and the victim, eager for quick gains, engaged with them.

Gradually, the scammers earned his trust, convincing him to open an "Institutional Trading Account" through a mobile app on Google Play Store. Trusting their guidance, he deposited ₹90 lakh into a broker company's account. To cement the deception, the scammers created a fake virtual profit of ₹15.69 crore in his account, making the victim believe the opportunity was legitimate. When he tried to withdraw the funds, they blocked the transaction and demanded an additional ₹1.45 crore as a "Profit Sharing" fee. Only then did the victim realize he had been scammed.

To avoid falling prey to such scams, follow these steps:

• Verify the Source: Always confirm the legitimacy of any investment opportunity before engaging.
• Be Wary of Unsolicited Advice: Avoid trusting unsolicited advice from unknown sources on platforms like WhatsApp.
• Use Trusted Platforms: Stick to well-known, regulated financial platforms and apps.
• Be Skeptical of Quick Money: Be cautious of investment offers promising unusually high returns in a short time—they are often scams.