The fraudsters allegedly used social media ads and WhatsApp groups to promote "AI trading tips" and fake platforms.
The U.S. Securities and Exchange Commission (SEC) has filed charges against a network of allegedly fraudulent cryptocurrency trading platforms and so-called AI investment clubs, alleging they operated a coordinated scheme to defraud retail investors of more than $14 million.
In a lawsuit filed in federal court in Colorado, the SEC named the alleged crypto platforms as Morocoin Tech Corp., Berge Blockchain Technology Co. Ltd., and Cirkor Inc., along with the AI investment clubs Wealth Inc., Lane Wealth Inc., AI Investment Education Foundation Ltd., and Zenith Asset Tech Foundation.
Regulators allege these entities coordinated in an “investment fraud scheme” that relied on advertising on social media, messaging apps, and fabricated crypto products.
SEC: Crypto scams masquerading as AI lure investors via social media and WhatsApp.
According to the SEC, this plan will be in operation at least from January 2024 to January 2025.
The investment clubs allegedly recruited investors through advertisements on social media platforms, then redirected conversations to WhatsApp groups, where scammers posed as financial experts.
In these conversations, they promote “AI-generated investment tips” to build credibility and trust.
Once investors were drawn in, they were instructed to open and deposit funds into accounts on Morocoin, Berge, and Cirkor — platforms that the SEC says falsely claimed to be licensed crypto exchange .
The defendants are also accused of offering “security Token Issuance ,” presented as if they were issued by legitimate companies.
In fact, according to the regulatory body, no trading activity took place, the platforms were fake, and neither the Token Issuance nor the issuing companies existed.
When investors sought to withdraw their funds, the SEC stated that the defendants placed additional obstacles, including requiring upfront fees, thereby further draining the victims' accounts.
In total, at least $14 million was stolen from retail investors in the US and transferred overseas through a network of bank accounts and cryptocurrency wallets, according to the lawsuit.
“This case highlights a form of investment fraud that is all too familiar,” said Laura D’Allaird , head of the SEC’s Emerging Technologies and Cybersecurity Division. She said the case shows how fraudsters are exploiting claims related to AI and the crypto narrative to target retail investors.
The SEC has prosecuted the defendants for allegedly violating the anti-fraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. The agency is seeking a permanent injunction, civil penalties, and the repayment of any ill-gotten gains with interest.
SEC scales back crypto enforcement activities as Trump returns to the White House.
According to reports, the SEC has significantly reduced its enforcement activities against the cryptocurrency industry since President Donald Trump returned to power.
Nearly 60% of cases involving crypto have been dismissed, suspended, or dismissed, while enforcement actions in traditional financial markets have generally remained unchanged.
Notable cases affected by this narrowing include the SEC's protracted lawsuits against Ripple Labs and Binance.
At the same time, changes at the top levels of the SEC are expected to continue reshaping the agency's stance.
Paul Atkins , a Republican appointee XEM more open to a market-based regulatory approach, is expected to retain his chairmanship for the foreseeable future. However, the committee is preparing for the loss of its last remaining Democratic member.
