Washington, D.C.: The U.S. Securities and Exchange Commission (SEC) on Monday filed enforcement actions against three so-called crypto asset trading platforms and four investment clubs accused of orchestrating a coordinated scheme that defrauded retail investors of more than $14 million, the regulator said in a press release.
According to the SEC, defendants including Morocoin Tech Corp., Berge Blockchain Technology Co. Ltd. and Cirkor Inc., alongside investment clubs AI Wealth Inc., Lane Wealth Inc., AI Investment Education Foundation Ltd. and Zenith Asset Tech Foundation, used social media advertisements and messaging-app group chats to target U.S. retail investors with promises of high returns based on supposed AI-generated investment tips and access to exclusive crypto trading opportunities.
The complaint alleges that starting in early 2024 and extending through early 2025, the investment clubs lured participants via ads on platforms such as Instagram and Facebook to join WhatsApp groups where fraudsters posed as financial professionals. Trust was cultivated through curated screenshots and purported algorithmic insights before investors were directed to open accounts on the crypto trading platforms.
Once funds were deposited, the SEC said, no actual trading occurred. The platforms and their affiliates allegedly presented fabricated account balances and promoted “Security Token Offerings” allegedly backed by legitimate firms that, in reality, did not exist, according to the complaint. When investors attempted to withdraw funds, the defendants demanded advance fees — another red flag — and often blocked withdrawals, effectively misappropriating the money.
Laura D’Allaird, Chief of the SEC’s Cyber and Emerging Technologies Unit, said the case “highlights an all-too-common form of investment scam … targeting U.S. retail investors with devastating consequences. Fraud is fraud, and we will vigorously pursue securities fraud that harms retail investors,” underlining the heightened scrutiny of digital-asset frauds.
The SEC’s complaint, filed in the U.S. District Court for the District of Colorado, charges the defendants with violations of the anti-fraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. The regulator is seeking permanent injunctions, civil penalties, disgorgement and prejudgment interest against the entities involved.
In its release, the SEC’s Office of Investor Education and Assistance also flagged the risks of unsolicited investment clubs and urged investors to verify backgrounds via Investor.gov before committing funds, especially when solicited through social media or messaging apps.