The U.S. Securities and Exchange Commission (SEC) has filed charges against two alleged fake cryptocurrency platforms, NanoBit and CoinW6.
Accusing them of deceiving investors and stealing their money, the move marks the SEC’s first case targeting this type of scam.
The SEC filed two complaints against five entities and three individuals in the U.S. District Courts for the Eastern District of New York and the Central District of California. The complaints allege that investors were lured through social media platforms such as WhatsApp, LinkedIn, and Instagram in what is described as a “relationship investment scam.”
“Relationship investment scams, including those involving crypto asset investments, pose a risk of catastrophic harm to retail investors, and the threat is increasing rapidly as these scams become more popular with fraudsters,” said Gurbir S. Grewal, director of the SEC’s Division of Enforcement.
Such scams, sometimes referred to as “pig butchering” or romance scams, have become a growing concern in the cryptocurrency industry. Estimates suggest that victims have lost around $75 billion from 2020 through early 2024.
Last week, the Commodity Futures Trading Commission (CFTC) announced it was collaborating with federal and state regulators, including the SEC, to address the rising threat of these scams.
The SEC’s complaint alleges that, between October 2023 and June 2024, individuals posed as “financial industry professionals” in WhatsApp groups to encourage customers to invest through a fake crypto platform called NanoBit.
NanoBit falsely claimed its affiliate, NanobitUS Securities, was an SEC-registered broker, promoting fake initial coin offerings as lucrative opportunities. In reality, investors’ money was diverted to “scheme participants,” who transferred over $2 million to Hong Kong through various bank accounts.
Similarly, CoinW6 participants allegedly posed as wealthy young professionals on LinkedIn and Instagram and pursued romantic relationships with victims over WhatsApp. They promised returns of up to 3% daily from staking, mining, and other products. However, according to the SEC, investors’ funds were misappropriated, and the purported investments, profits, and account balances were fabricated.
When investors attempted to withdraw their supposed profits, the fraudsters demanded additional payments for taxes or fees, claimed that the crypto assets were frozen as part of a law enforcement inquiry, or resorted to blackmail using compromising romantic communications over WhatsApp.
