SEC Cracks Down on Major Cryptocurrency Scam Targeting U.S. Investors

The SEC just pulled back the curtain on a scheme that promised the moon but delivered empty wallets.

How the scam worked

Regulators allege the operation used classic playbook moves—too-good-to-be-true returns, fabricated testimonials, and pressure tactics—all wrapped in crypto's shiny veneer. It targeted a specific vulnerability: the hunger for quick gains in a complex new asset class.

Why this crackdown matters

This isn't just another enforcement footnote. It's a signal. The watchdog is showing its teeth, proving it can track digital breadcrumbs across blockchains. For the industry, it's a painful but necessary scrub—clearing out the bad actors so legitimate projects can build trust. It's the financial equivalent of weeding the garden so the actual crops can grow.

The takeaway for investors

Stay skeptical. If a pitch sounds like it was written by a fantasy novelist, it probably was. Do your own research, demand transparency, and remember the oldest rule in the book: if it seems too good to be true, it almost certainly is—especially when it involves 'revolutionary' tech and jargon meant to confuse. Sometimes, the most innovative thing in finance is just an old scam wearing a new digital mask.

Fake Platforms and WhatsApp Clubs Fueling the Traffic

According to the SEC’s complaint, three entities claimed to operate platforms for cryptocurrency trading: Morocoin Tech, Berge Blockchain Technology, and Cirkor. Investors were initially targeted through advertisements on popular social media channels. These ads emphasized promises of easy profits and advanced, AI-backed investment tips. Interested users were then invited to join WhatsApp group chats.

Within these groups, scammers posed as experienced financial professionals, offering AI-backed trading advice and gradually establishing trust. Once trust was secured, investors were urged to open accounts and deposit funds on the platforms supposedly managed by Morocoin, Berge, and Cirkor. The SEC added that these platforms were misleadingly presented as licensed and regulated entities, even falsely claiming governmental approval.

Furthermore, four entities marketed as investment clubs were implicated in this scheme by promoting Security Token Offerings (STOs) under fictitious names such as AI Wealth, Lane Wealth, AI Investment Education Foundation, and Zenith Asset Tech Foundation. According to the complaint, it was falsely represented that the STOs were linked to real companies. In reality, neither the companies nor the offerings existed, with no actual trading occurring on the platforms.

Investors Denied Withdrawal of Funds

The SEC noted that when investors attempted to withdraw funds, a secondary pressure mechanism was activated. Additional upfront fees were demanded for the withdrawal process. The SEC highlighted this demand as a common method used to exacerbate losses in fraudulent schemes. The complaint alleged that investor funds were ultimately misappropriated entirely and redirected overseas through a network of accounts and wallets.

Laura D’Allaird, Chief of the SEC’s Cyber and Emerging Technologies Unit, described a multi-step plan where initial contact via social media ads evolved into gaining trust through assuming finance professional roles in WhatsApp chats. Subsequently, funds were transferred to fraudulent cryptocurrency platforms for misuse. According to the agency, the key element was the technology-aided perception of expertise targeting investor psychology.

Furthermore, the expansion of AI-supported fraud techniques was highlighted. Deepfake videos convincingly associating known figures like Elon Musk with fake investment advice were created, bypassing KYC controls, producing fake customer support correspondence, and cloning platform panels were some methods employed. In some scenarios, malicious software links were sent via Zoom invitations.