SEC Takes Action Against Alleged Cryptocurrency Scam
The U.S. Securities and Exchange Commission (SEC) has initiated legal proceedings against several companies accused of orchestrating a complex cryptocurrency fraud scheme that reportedly defrauded retail investors of over $14 million. The complaint names crypto trading platforms Morocoin Tech Corp., Berge Blockchain Technology Co., Ltd., and Cirkor Inc., along with investment clubs AI Wealth Inc., Lane Wealth Inc., AI Investment Education Foundation (AIIEF) Ltd., and Zenith Asset Tech Foundation as participants in this deceptive operation.
Details of the Scam Unveiled
The SEC’s allegations detail a multi-layered fraud designed to lure unsuspecting individuals through social media advertisements. Once trust was established through group chats, where con artists masqueraded as financial experts, victims were promised lucrative returns stemming from artificial intelligence (AI)-driven investment strategies. These perpetrators then directed victims to invest their money in fictitious cryptocurrency trading platforms, ultimately defrauding them of their investments.
Operation of Investment Clubs
According to the SEC, the investment clubs, AI Wealth, Lane Wealth, AIIEF, and Zenith, utilized messaging applications like WhatsApp to attract retail investors. These groups operated under the guise of providing investment insights from January to June 2024 and from July 2024 to January 2025, respectively. An unnamed individual in Beijing is alleged to have funded the registrations for AI Wealth, Lane Wealth, and Zenith.
Profiles of the Fraudulent Platforms
The SEC provided details regarding the fraudulent platforms involved in the scam: Morocoin Tech Corp., launched in December 2023, Berge Blockchain Technology Co., Ltd., established in June 2022, and Cirkor Inc., which began operations in May 2024. However, all three platforms are currently listed as delinquent or administratively dissolved.
Deceptive Tactics Employed
Each investment club featured a so-called “professor” who provided investors with updates on economic conditions and stock commentary via WhatsApp, along with an “assistant” managing daily interactions. These figures also distributed trading recommendations, falsely claiming these were derived from AI-generated signals. The SEC stated that the clubs cultivated investor trust with misleading AI-based investment advice, leading them to open accounts on the fraudulent trading platforms, which falsely asserted government licensing.
False Security Token Offerings
The investment clubs purportedly offered Security Token Offerings (STOs) that they claimed were linked to legitimate businesses. In truth, no actual trading occurred on these platforms, which were entirely fictitious, and the Security Token Offerings, along with their claimed issuing entities, were nonexistent. The AI Wealth and Lane Wealth groups promoted an STO for a cryptocurrency asset named SCT from a company called SatCommTech, while the AIIEF and Zenith groups marketed another STO for an asset dubbed HMB from a company called HumanBlock, both of which were found to be fictional.
Withdrawal Attempts and Further Fraud
Victims attempting to withdraw their funds faced additional deception, as the fraudulent platforms required them to pay advance fees to access their money. Ultimately, investors found themselves completely cut off from the services of these platforms. The total stolen amount, exceeding $14 million, was funneled overseas through a network of bank accounts and cryptocurrency wallets, often involving accounts linked to individuals in Southeast Asia.
Impact on Investors and SEC Response
Of the misappropriated funds, at least $7.4 million was in cryptocurrency assets, while $6.6 million was in fiat currency. Reports on platforms like Reddit indicate numerous individuals fell victim to this scam, with the AIIEF allegedly using fictional names such as “Richard Dill” and “Daisy Akemi” for their fraudulent personas. The defendants face charges for violating anti-fraud regulations under the Securities Act of 1933 and the Securities Exchange Act of 1934, with the SEC seeking permanent injunctions, civil penalties, and restitution with interest.
Warning Against Investment Scams
Laura D’Allaird, Chief of the Cyber and Emerging Technologies Unit, commented on the case, emphasizing the prevalence of such scams targeting U.S. retail investors and the severe repercussions they can have. “Fraud is fraud, and we will vigorously pursue securities fraud that harms retail investors,” she asserted, underscoring the SEC’s commitment to combating fraudulent practices in the investment landscape.
