The
Securities and Exchange Commission (SEC) filed fraud charges yesterday (Monday)
against seven companies it says ran a year-long scheme that bilked retail
investors out of more than $14 million through fake cryptocurrency trading
platforms and bogus WhatsApp investment clubs.
The
regulator charged crypto platforms Morocoin Tech Corp., Berge Blockchain
Technology Co., and Cirkor Inc., along with investment clubs AI Wealth Inc.,
Lane Wealth Inc., AI Investment Education Foundation Ltd., and Zenith Asset
Tech Foundation, with violating federal securities laws. All seven entities are
now defunct.
The scheme
started with social media advertisements that directed U.S. investors to join
WhatsApp groups masquerading as investment clubs. Some ads featured deepfake
videos of well-known financial professionals, according to the complaint filed
in U.S. District Court for the District of Colorado.
The use of
WhatsApp for investment fraud has become increasingly common. A joint survey
by FinanceMagnates.com and FXStreet found that messaging apps like Telegram
and WhatsApp lead in the number of traders who lose money to scams, with 60
percent of traders victimized on Telegram reporting fund losses.
Each club
operated through WhatsApp, with agents posing as professors who offered market
commentary and assistants who handled daily interactions with members. These
agents sent trade recommendations they falsely claimed were based on
AI-generated “signals”.
The same
individual in Beijing paid for the corporate registrations of AI Wealth, Lane
Wealth, and Zenith, according to corporate records cited in the complaint.
After
gaining investors’ trust, the club operators directed victims to open accounts
on the three purported crypto trading platforms. The platforms’ websites shared
common features, with Morocoin and Cirkor both billing themselves as the
“World’s First Stablecoin Trading Center” and posting identical
informational articles about crypto assets.
Fictitious Companies and
Securities
The
platforms falsely claimed to hold licenses from the SEC, the NFA, and FinCEN
Money Services Business registrations. Morocoin’s and Cirkor’s websites touted
“Impeccable Security” using “cutting-edge” technology and
claimed to have “$150 million in insurance against third-party theft.”
The
impersonation tactic mirrors a broader trend. Scammers have
increasingly posed as bank CEOs and financial influencers in WhatsApp groups to steal
money, promoting fake trading schemes through seemingly legitimate channels.
No trading
actually occurred on any of the platforms, according to the SEC. The accused
companies instead offered what they called “Security Token Offerings”
supposedly issued by legitimate businesses including NeuralNet, SatCommTech,
and HumanBlock.
All three
companies were fictitious. NeuralNet purportedly developed brain-computer
interface technology, SatCommTech claimed to build satellite communication
networks, and HumanBlock allegedly created blockchain -powered humanoid robots.
The
WhatsApp club operators compared the token offerings to initial public
offerings of stock and promised outsized returns. “It could very well
define the most glorious moment of your financial life,” one Zenith club
operator told investors about the HumanBlock token.
Deepfakes Enhance
Credibility of Scams
The use of
deepfake videos in the social media advertisements represents a growing threat
to investors. Fraudsters
have impersonated prominent financial figures using AI-generated videos to lure victims into fake
investment schemes on platforms like Facebook and WhatsApp.
Scammers
also use AI to craft convincing messages. A recent study documented 236
major crypto scam cases, with fraudsters using AI-written messages on WhatsApp before moving
victims to other platforms like Telegram to complete the fraud.
Withdrawal Demands
Triggered Advance Fee Scam
When
investors tried to withdraw funds, the platforms demanded advance fees. Some
were told they had to repay fictitious loans they supposedly took through the
platforms.
In June
2024, Morocoin told investors it was under investigation by the SEC and MSB
regulators, which would freeze all accounts for three years. The platform urged
investors to withdraw assets within ten days but said they needed to pay
expedited withdrawal fees using money from outside their accounts.
Berge and
Cirkor posted nearly identical notices in January 2025 about supposed SEC
investigations. None of these investigations were real.
The
pressure tactics are common features of investment scams on social media.
European regulators have warned about
fraudsters impersonating financial authorities, falsely offering recovery services for
upfront fees after victims fall for fake investment schemes promoted through
Instagram and Facebook ads .
Laura D’Allaird, Chief of the SEC’s Cyber and Emerging Technologies Unit
Laura
D’Allaird, Chief of the SEC’s Cyber and Emerging Technologies Unit, said in a
statement that the case “highlights an all-too-common form of investment
scam that is being used to target U.S. retail investors with devastating
consequences”.
Funds Funneled Overseas
Through Complex Web
The SEC
traced at least $7.4 million in cryptocurrency losses from 57 U.S. investors
and $6.6 million in fiat currency losses from 26 investors. One Cirkor investor
wired over $1.4 million to a bank in Indonesia, while a Morocoin investor made
seven separate wires totaling more than $1 million to accounts in China and
Hong Kong.
The stolen
funds moved through a network of at least 27 domestic bank accounts and
multiple unhosted crypto wallets. Some funds transited through accounts held by
Chinese or Burmese individuals in southeast Asia.
Federal
prosecutors separately seized $8.5 million worth of Tether cryptocurrency
connected to investment fraud victims, the Justice Department announced last
week.
The SEC is
seeking permanent injunctions, civil penalties against all seven defendants,
and disgorgement with prejudgment interest against the three platform
operators.
The
Securities and Exchange Commission (SEC) filed fraud charges yesterday (Monday)
against seven companies it says ran a year-long scheme that bilked retail
investors out of more than $14 million through fake cryptocurrency trading
platforms and bogus WhatsApp investment clubs.
The
regulator charged crypto platforms Morocoin Tech Corp., Berge Blockchain
Technology Co., and Cirkor Inc., along with investment clubs AI Wealth Inc.,
Lane Wealth Inc., AI Investment Education Foundation Ltd., and Zenith Asset
Tech Foundation, with violating federal securities laws. All seven entities are
now defunct.
The scheme
started with social media advertisements that directed U.S. investors to join
WhatsApp groups masquerading as investment clubs. Some ads featured deepfake
videos of well-known financial professionals, according to the complaint filed
in U.S. District Court for the District of Colorado.
The use of
WhatsApp for investment fraud has become increasingly common. A joint survey
by FinanceMagnates.com and FXStreet found that messaging apps like Telegram
and WhatsApp lead in the number of traders who lose money to scams, with 60
percent of traders victimized on Telegram reporting fund losses.
Each club
operated through WhatsApp, with agents posing as professors who offered market
commentary and assistants who handled daily interactions with members. These
agents sent trade recommendations they falsely claimed were based on
AI-generated “signals”.
The same
individual in Beijing paid for the corporate registrations of AI Wealth, Lane
Wealth, and Zenith, according to corporate records cited in the complaint.
After
gaining investors’ trust, the club operators directed victims to open accounts
on the three purported crypto trading platforms. The platforms’ websites shared
common features, with Morocoin and Cirkor both billing themselves as the
“World’s First Stablecoin Trading Center” and posting identical
informational articles about crypto assets.
Fictitious Companies and
Securities
The
platforms falsely claimed to hold licenses from the SEC, the NFA, and FinCEN
Money Services Business registrations. Morocoin’s and Cirkor’s websites touted
“Impeccable Security” using “cutting-edge” technology and
claimed to have “$150 million in insurance against third-party theft.”
The
impersonation tactic mirrors a broader trend. Scammers have
increasingly posed as bank CEOs and financial influencers in WhatsApp groups to steal
money, promoting fake trading schemes through seemingly legitimate channels.
No trading
actually occurred on any of the platforms, according to the SEC. The accused
companies instead offered what they called “Security Token Offerings”
supposedly issued by legitimate businesses including NeuralNet, SatCommTech,
and HumanBlock.
All three
companies were fictitious. NeuralNet purportedly developed brain-computer
interface technology, SatCommTech claimed to build satellite communication
networks, and HumanBlock allegedly created blockchain -powered humanoid robots.
The
WhatsApp club operators compared the token offerings to initial public
offerings of stock and promised outsized returns. “It could very well
define the most glorious moment of your financial life,” one Zenith club
operator told investors about the HumanBlock token.
Deepfakes Enhance
Credibility of Scams
The use of
deepfake videos in the social media advertisements represents a growing threat
to investors. Fraudsters
have impersonated prominent financial figures using AI-generated videos to lure victims into fake
investment schemes on platforms like Facebook and WhatsApp.
Scammers
also use AI to craft convincing messages. A recent study documented 236
major crypto scam cases, with fraudsters using AI-written messages on WhatsApp before moving
victims to other platforms like Telegram to complete the fraud.
Withdrawal Demands
Triggered Advance Fee Scam
When
investors tried to withdraw funds, the platforms demanded advance fees. Some
were told they had to repay fictitious loans they supposedly took through the
platforms.
In June
2024, Morocoin told investors it was under investigation by the SEC and MSB
regulators, which would freeze all accounts for three years. The platform urged
investors to withdraw assets within ten days but said they needed to pay
expedited withdrawal fees using money from outside their accounts.
Berge and
Cirkor posted nearly identical notices in January 2025 about supposed SEC
investigations. None of these investigations were real.
The
pressure tactics are common features of investment scams on social media.
European regulators have warned about
fraudsters impersonating financial authorities, falsely offering recovery services for
upfront fees after victims fall for fake investment schemes promoted through
Instagram and Facebook ads .
Laura D’Allaird, Chief of the SEC’s Cyber and Emerging Technologies Unit
Laura
D’Allaird, Chief of the SEC’s Cyber and Emerging Technologies Unit, said in a
statement that the case “highlights an all-too-common form of investment
scam that is being used to target U.S. retail investors with devastating
consequences”.
Funds Funneled Overseas
Through Complex Web
The SEC
traced at least $7.4 million in cryptocurrency losses from 57 U.S. investors
and $6.6 million in fiat currency losses from 26 investors. One Cirkor investor
wired over $1.4 million to a bank in Indonesia, while a Morocoin investor made
seven separate wires totaling more than $1 million to accounts in China and
Hong Kong.
The stolen
funds moved through a network of at least 27 domestic bank accounts and
multiple unhosted crypto wallets. Some funds transited through accounts held by
Chinese or Burmese individuals in southeast Asia.
Federal
prosecutors separately seized $8.5 million worth of Tether cryptocurrency
connected to investment fraud victims, the Justice Department announced last
week.
The SEC is
seeking permanent injunctions, civil penalties against all seven defendants,
and disgorgement with prejudgment interest against the three platform
operators.
