SEC Charges Fake Crypto Platforms for $14M Fraud

The SEC has charged three fake cryptocurrency trading platforms and four investment clubs with defrauding investors of $14 million. Operations involved group chats posing as professionals, directing funds to fraudulent platforms without legitimate crypto trading.

This incident underlines the vulnerability of retail investors to fraudulent platforms exploiting advanced technology and group chat dynamics.

Entities and Accusations

The SEC charged entities Morocoin Tech Corp., Berge Blockchain Technology Co. Ltd., and Cirkor Inc. along with clubs AI Wealth Inc., Lane Wealth Inc., AI Investment Education Foundation Ltd., and Zenith Asset Tech Foundation. The entities allegedly misled investors into fake platforms through WhatsApp.

Victims transferred funds to fraudulent accounts, believing they were investing in government-licensed platforms. Promised profits never surfaced, demonstrating the scam’s impact on financial trust.

Market Impact and Regulatory Actions

Cryptocurrency markets remain unaffected by the scams, as they involved no specific tokens. Fraud is rampant, the SEC highlighted in investor alerts, recommending due diligence on platforms.

The SEC aims to curb such schemes through penalties and injunctions. Laura D’Allaird stated their commitment to pursuing fraud harming retail investors. This reflects ongoing regulatory efforts to protect financial ecosystems.

“This matter highlights an all-too-common form of investment scam that is being used to target U.S. retail investors with devastating consequences. Our complaint alleges a multi-step fraud that attracted victims with ads on social media, built victims’ trust in group chats where fraudsters posed as financial professionals and promised profits from AI-generated investment tips, then convinced victims to put their money into fake crypto asset trading platforms where it was misappropriated.” – Laura D’Allaird, Chief of the Cyber and Emerging Technologies Unit, SEC

The absence of real transactions or known assets affected underscores the fictitious nature of these operations. Regulatory actions are unlikely to influence legitimate markets or technologies, emphasizing continued vigilance in crypto spaces.