The Securities and Exchange Commission (SEC) outlined the scam in a Monday (Dec. 22) press release announcing that it filed charges against three purported crypto asset trading platforms and four so-called investment clubs.
The regulator filed the charges against the platforms Morocoin Tech, Berge Blockchain Technology, and Cirkor, and the clubs AI Wealth, Lane Wealth, AI Investment Education Foundation, and Zenith Asset Tech Foundation, according to the release.
The SEC’s complaint alleges that the clubs operated on WhatsApp, used social media ads to solicit investors to join the clubs, gained investors’ confidence in group chats, and lured them to open and fund accounts on the platforms.
It alleges that the clubs and platforms then offered “Security Token Offerings” that in fact did not exist and misappropriated at least $14 million from U.S.-based investors.
The regulator’s complaint charges the defendants with violating anti-fraud laws, seeks permanent injunctions and civil penalties against all the defendants, and seeks disgorgement with prejudgment interest against the three platforms.
“This matter highlights an all-too-common form of investment scam that is being used to target U.S. retail investors with devastating consequences,” Laura D’Allaird, chief of the Cyber and Emerging Technologies Unit at the SEC, said in the release.
The SEC’s Office of Investor Education and Assistance issued an investor alert about this form of fraud on Tuesday.
The FBI’s Internet Crime Complaint Center (IC3) said in April that cryptocurrency fraud led to at least $9.3 billion in losses reported in 2024, a 66% increase over the previous year. These losses stemmed from investment scams, extortion, sextortion and fraudulent activity involving cryptocurrency ATMs and kiosks.
The Federal Trade Commission (FTC) said in March that consumers reported losing more money to investment scams than any other category of fraud in 2024. Consumers reported losing $5.7 billion to investment scams last year, a 24% increase over 2023.
Digital risk protection platform CTM360 said in July that it identified more than 17,000 fake news sites used by scammers to promote investment fraud. These sites are promoted through fake news articles posted through ad platforms or social media, are designed to look like legitimate news outlets, and publish fabricated stories designed to lure readers into scams.
The Justice Department said in June that it filed a civil forfeiture complaint targeting $225.3 million in cryptocurrency that it said was connected to the theft and laundering of funds from victims of cryptocurrency investment fraud schemes.
