Federal regulators have filed charges against several purported crypto asset trading platforms and investment clubs accused of defrauding US retail investors of more than $14m through an elaborate investment confidence scam.
The Securities and Exchange Commission (SEC) announced the action on Monday.
The complaint alleges that the scheme used social media advertising and messaging apps to draw in victims, promising sophisticated returns through AI-powered investment strategies.
Instead, investors’ money was allegedly diverted through a network of bank accounts and crypto wallets, with no real trading activity taking place.
According to the SEC, from at least January 2024 to January 2025, investment clubs AI Wealth Inc., Lane Wealth Inc., AI Investment Education Foundation Ltd. and Zenith Asset Tech Foundation recruited members through social media promotions. Interested individuals were invited into WhatsApp group chats where fraudsters posed as experienced financial professionals.
Within these chats, participants were shown what were described as AI-generated trading tips designed to build trust. Once confidence was established, investors were directed to open and fund accounts on crypto trading platforms Morocoin Tech Corp., Berge Blockchain Technology Co. Ltd. and Cirkor Inc.
The SEC alleges that the platforms falsely claimed to be government licensed and promoted so-called Security Token Offerings linked to legitimate companies. In reality, the complaint says, the platforms were fake, the offerings did not exist and no trading occurred.
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Key Allegations and Investor Losses
When investors attempted to withdraw funds, the defendants allegedly demanded additional advance fees, further increasing losses. The SEC claims that at least $14m was misappropriated from US-based retail investors over the course of the scheme.
The complaint highlights several alleged features of the fraud:
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Use of social media ads and messaging apps to recruit investors
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Fabricated trading platforms showing false balances
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Non-existent Security Token Offerings and issuing companies
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Transfer of investor funds overseas through crypto wallets
“This matter highlights an all-too-common form of investment scam that is being used to target US retail investors with devastating consequences,” said Laura D’Allaird, chief of the SEC’s Cyber and Emerging Technologies Unit.
“Fraud is fraud, and we will vigorously pursue securities fraud that harms retail investors.”
The case was filed in the United States District Court for the District of Colorado. The SEC alleges violations of the anti-fraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934, and is seeking permanent injunctions, civil penalties and disgorgement with interest from certain defendants.
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