The U.S. Securities and Exchange Commission has accused two fake cryptocurrency platforms, NanoBit and CoinW6, of lying to investors and stealing their money, in what the agency said were the first reports of this type of scam.
The regulator filed two complaints Tuesday in the U.S. District Court for the Eastern District of New York and the U.S. District Court for the Central District of California against five entities and three individuals. Both complaints allege that investors were “enticed” through social media, including WhatsApp, LinkedIn and Instagram, as part of a “relationship investment scam.”
“Relationship investment fraud, including cryptocurrency asset-based investment fraud, poses a risk of devastating harm to retail investors, and the threat is growing rapidly as these scams become more popular with fraudsters,” said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement. name On Tuesday.
Romance scams, sometimes called “pig slaughter,” are a type of trust fraud that is becoming a growing problem in the cryptocurrency industry. By some estimates, victims have been scammed out of $75 billion since 2020 and early this year. Last week, the Commodity Futures Trading Commission announced that it is working with federal and state regulators, including the SEC, to combat the growing threat of these scams.
From October 2023 to June 2024, people pretended to be “financial industry experts” via WhatsApp groups to solicit customers to invest in a fake cryptocurrency platform called NanoBit.
“To convince investors that the platform was safe, NanoBit allegedly falsely claimed that its affiliate, NanobitUS Securities, was an SEC-registered broker. The financial professional then promoted a fake ICO as a way for investors to make significant profits,” the SEC said.
Instead of generating profits, investors’ funds went to “fraudsters” who transferred more than $2 million to Hong Kong via bank accounts.
In the case of CoinW6, the SEC says the scheme’s participants pretended to be wealthy, young professionals, connecting with victim investors via LinkedIn and Instagram, and even “sought romantic relationships via WhatsApp.” The alleged scammers told investors they could earn up to 3% daily from CoinW6’s staking, mining, and other products.
“In reality, investors’ funds were misappropriated, and their nominal investments, earnings, and account balances were fictitious,” the SEC said. “When investors attempted to withdraw their nominal earnings, the scammers allegedly demanded additional payments for taxes or fees, told investors their cryptocurrency assets were frozen as part of a law enforcement investigation, or attempted to blackmail them using compromising romantic communications via WhatsApp.”
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