The U.S. Securities and Exchange Commission charged three people on December 11 with impersonating stock brokers and investment advisors to carry out a scheme involving digital assets.
The complaint names three Nigerian nationals and alleges that their actions diverted more than $2.9 million from at least 28 investors by directing them to fraudulent platforms and then instructing them to purchase Bitcoin from legitimate brokers or crypto traders. exchanges before transferring the funds to blockchain addresses linked to the defendants.
According to the SEC, the defendants allegedly created websites posing as multiple professionals affiliated with established U.S. companies and used speech modification software, as well as online group chats and social media, to build trust and interest in their purported trading expertise.
An alert from Investor.gov states that impersonation appears to be becoming increasingly sophisticated due to technological advances, including the use of AI-powered content and deepfake audio or video. The alleged scheme in this case allegedly encouraged investors to research identities extracted from the public records of actual investment professionals.
The operators then set up fake investment account interfaces that show unrealized profits, enticing victims to contribute additional money. Although participants saw purported monthly returns of up to 25%, the funds were never invested as claimed and attempts to withdraw assets led to demands for further fees.
Regulatory units with crypto-specific mandates, including the SEC’s Crypto Assets and Cyber Unit, were involved, indicating that such enforcement actions are increasingly targeting areas where traditional fraud methods intersect with decentralized financial networks and digital asset platforms.
Voice-altering software and spoofed phone numbers made it difficult for investors to verify their identities, and the use of encrypted messaging apps and social platforms allowed the perpetrators to operate outside the traditional brokerage environment. Their reliance on digital assets, primarily Bitcoin, added layers of complexity, including blockchain transfers and multiple addresses, complicating asset tracking for the SEC.
As the SEC reported, the defendants purchased domain names online and used third-party commentary, chat groups, and investment forums to draw attention to their false personas.
According to the complaint, investors were often asked to download trading apps under the guise of access to unique copy trading systems or algorithmic strategies, but no legitimate activity took place. Instead, the funds were quickly moved and made irrecoverable.
The SEC, working in parallel with the U.S. Attorney’s Office for the District of New Jersey, has charged all three defendants with multiple violations of the federal securities laws and is seeking permanent injunctions, disgorgement with prejudgment interest, and civil penalties.
The Office of Investor Education and Advocacy alert, prepared in conjunction with the FBI, recommends verifying identities through sources such as Form CRS and publicly available databases, avoiding unverified contact information and maintaining heightened vigilance when requested send money via crypto.
The SEC’s legal action and related investor warning reflect an enforcement environment that is adapting to evolving tactics leveraged by crypto markets. The agency’s complaint, filed in the U.S. District Court for the District of New Jersey, asks for fines and remedies intended to stop further misconduct and recover stolen funds.
