Investment Scam Alert: Beware of the Chinese Stock Scam.

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The investment scam leverages investor FOMO: Fear of Missing Out.

In August of 2025, the Wall Street Journal reported that, once again, American Investors were becoming victims of an IPO opportunity tied to a Chinese stock scam. Ironically, a similar article appeared in the Journal in 2022, reporting that investors were being scammed by an overseas investment trend that was leading to substantial losses.

This Chinese IPO wasn’t an obvious scheme that lured wide-eyed investors with an “too-good-to-be-true” promise; however, it had just enough allure to fuel the hopes of Americans seeking to make “easy money.” After all, most investors are always looking for the next best thing that’s going to give them a great return or even make them wealthy.

And it didn’t involve investors handing their money over to scammers via gift cards or transferring money to fake websites. That’s what makes this scam so insidious. These Chinese small-cap stocks were and are often traded on the Nasdaq Stock Market.

One investor, a Mr. Lindstrom, a college professor from Utah, lost $80,000.
Another victim, a commercial property manager from N. Carolina, also lost his $320,000 investment.
An investor from the state of Missouri lost the entire $54,000 he thought would bring him wealth, as his new financial advisor told him.

The Feds are looking into the Chinese stock scam.

The 2025 Chinese Stock scam is so effective and lucrative for the fraudsters that the criminal division of the U.S. Justice Department has joined the fight against this specific type of fraud. That’s good news, because American investors are being targeted. The greedy scammers knew precisely how to lure investors, especially those who are vulnerable, into a trap through this investment deception. The perpetrators preyed on one of the strongest emotional motivators that can influence investors’ decisions: fear of missing out, also known as FOMO. And they used this classic investment scam strategy to take advantage of investors’ misplaced trust.

The pump-and-dump scheme.

The Chinese stock scam employed a well-known strategy by investment scammers seeking to profit quickly from victims. The victims themselves don’t help their cause because they are also looking for quicker riches, rather than slower, long-term wealth building.

That scheme is called a pump-and-dump or pump-and-run, and every investor needs to be aware of this flavor of fraud and know how to spot signs. Here is a simple, straightforward definition of a pump-and-dump investment scam, courtesy of the website Investopedia:

“Pump-and-dump schemes manipulate stock prices through false hype and are illegal under securities law. Historically conducted via cold calling, these schemes now thrive online, targeting micro- and small-cap stocks. Pump-and-dump tactics make it crucial for investors to recognize the signs and protect their investments.”

The lure of the Chinese IPO.

Here’s how a small-cap IPO scam, partnered with a pump-and-dump scheme, combines to steal millions from investor who willingly and eagerly bet their money on an investment gamble:

The fraud masterminds behind the manipulation are the face of the scam; they are the people who post social media ads and call or email investors. Not only do they pretend to be investment advisors, but they also push investors to get in on the ground floor of a can’t-miss investment opportunity.

The fraudsters attract investors’ attention through ads on social media, as well as through social media messages or groups.
Interested investors begin to interact with the investment advisors.
The fraudster promotes the Chinese small-cap stock as a great opportunity, which is not at all true. They claim the companies are on the verge of a massive merger or a significant technological breakthrough.
The targeted investor is told they can buy in when shares are very low and are told (if not promised or “guaranteed”) their investment will skyrocket in value over time. Thousands of individual investors, all being manipulated, put in $50,000 to $300,000 or more.
Meanwhile, a group of fraudsters who invested money alongside the investors has been working in concert to pump up the price of the stock rapidly. The game is rigged; at one moment, they shared their shares, then sold and dumped them on the market. They’ve made millions, on a relatively worthless stock, from the quick investments of hopeful investors.
But the whole thing was an illusion. Within days, the value of the stock drops to just a few dollars per share. The investors’ money is gone, taken by the fraudsters who not only coordinated the scam but also waited until the duped investors had driven the stock price up before cashing out and disappearing.

Here’s what happened to one Chinese stock scam victim.

That’s what happened to one American, Brian Lindstrom from Utah, who was relatively new to investing. He followed the advice of what he thought was a seasoned financial advisor, who told him to buy stock in a small Chinese shipping company. The investor took the advice and made a bold investment move: Within a matter of days, he lost the entire $80,000 he invested in the stock, which had plummeted in value.

Lindstrom said he was lured into the investment opportunity by ads on Facebook and Instagram that encouraged them to buy a stock in a small Chinese company. In this case, the stock was Jayud Global Logistics. He was told the company was about to be acquired by a much larger shopping company, which would drive the value up. Lindstrom was just one of hundreds of U.S. investors who lost money in a similar swindle. The names of the other suspicious Chinese small-cap stocks were China Liberal Education Holdings, Lixiang Education Holding, and NetClass Technology.

How to avoid a pump-and-dump investment scheme:

Here’s what the investors need to watch for to avoid being swept up and swindled by a classic pump-and-dump investment scam.

Beware of ads promising great returns on social media or from social media messages.
Don’t get too personal or friendly with new connections who are investment professionals. Part of their scheme is to earn your trust.
Anyone promoting small-cap stocks from China, even if they are traded on a U.S. stock exchange. Stock regulators are tightening regulations for those stocks.
Resist pressure from advisors to invest quickly, based chiefly on their advice or direct encouragement.
Don’t take any advice on face value, without doing research of your own or asking for details.
Avoid being lured by high returns and quick profits, which are characteristic of fraudulent investments.

Need to report an investment scam? Here’s where to get help.

At WhatIsMyIPAddress.com, we’re here to help. Click on this link to see a list to see our exclusive resource, “Need to Report a Scam?” It guides you to a list of websites and organizations where you can report an investment scam.

If you have been the victim of a scam, you need to report it. For the average consumer, the most significant losses to cyber criminals come from investment fraud. Losses in the hundreds of thousands of dollars are common and frequent. Even many romance scams today have an element of investment fraud tied to them. Most victims think they’re getting rich while finding love, while they’re losing all their money to a heartless scammer.

Learn more about investment scams.

Fraudsters use all kinds of schemes to steal your money, and investment scams are often the most profitable. Increasing your awareness of investment scams will help you spot a trap and avoid becoming a victim. For more valuable resources, see the articles and podcast episodes listed at our Learning Center.

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