The U.S. Securities and Exchange Commission (SEC) has charged three so-called cryptocurrency trading platforms and four investment clubs with defrauding retail investors of more than $14 million.
Article by: Timmy Shen
Article source: The Block
The U.S. Securities and Exchange Commission (SEC) has charged three so-called crypto asset trading platforms and four investment clubs with operating an online investment scam that defrauded people of more than $14 million.
The U.S. Securities and Exchange Commission (SEC) filed a lawsuit in Colorado District Court on Monday, accusing the seven entities of orchestrating what regulators call an “investment confidence scam” that heavily relied on social media and instant messaging applications.
The entities mentioned in the complaint include: Morocoin Tech Corp., Berge Blockchain Technology Co., Ltd., and Cirkor Inc., as well as investment clubs AI Wealth Inc., Lane Wealth Inc., AI Investment Education Foundation Ltd., and Zenith Asset Tech Foundation.
"This incident highlights a very common form of investment fraud that is being used against retail investors in the United States and has devastating consequences," said Laura D'Allaird, head of the Cyber and Emerging Technologies Division of the U.S. Securities and Exchange Commission, in a statement.
The U.S. Securities and Exchange Commission (SEC) has accused the scam of operating from January 2024 to January 2025, luring victims through ads on popular social media platforms. These ads invited users to join so-called "investment clubs," which primarily operated on WhatsApp, where scammers impersonated financial professionals and used group chats to gain trust.
WhatsApp chat rooms
Once inside the chat rooms, investors receive investment advice that the U.S. Securities and Exchange Commission (SEC) calls artificial intelligence-generated, designed to build credibility and simulate consistent profits. These clubs then allegedly lure victims into opening accounts and depositing funds on cryptocurrency exchanges such as Morocoin, Berge, and Cirkor—platforms the SEC calls entirely fraudulent.
The agency stated that these platforms claimed to offer legitimate, government-licensed trading services. However, the U.S. Securities and Exchange Commission (SEC) stated that no transactions actually occurred.
The U.S. Securities and Exchange Commission (SEC) stated that the scam escalated further by promoting fake security token offerings (STOs). The SEC also alleged that these STOs and their issuing companies were fictitious. When investors attempted to withdraw their funds, the defendants allegedly demanded additional upfront payments, exacerbating investor losses.
The U.S. Securities and Exchange Commission (SEC) stated that the defendants misappropriated at least $14 million from U.S. investors. These funds were allegedly transferred overseas through a series of bank accounts and cryptocurrency wallets.
In addition, the U.S. Securities and Exchange Commission (SEC) issued an investor alert on Monday, warning that scammers frequently use social media and group chats to promote their schemes. The agency urged investors to verify the background information of any promoters through its Investor.gov website.
The U.S. Securities and Exchange Commission (SEC) wrote: "Be wary of any group chat where you receive investment advice from strangers—this is often the beginning of an investment scam."
