US Regulators Crack Down on Fake Crypto Investment Scams on Social Media

Todaysgist, News The United States Securities and Exchange Commission (SEC) has charged several entities and individuals in connection with two investment frauds related to fake cryptocurrency platforms, Nanobit and Coinw6.

The defendants are accused of using social media applications such as Whatsapp, Linkedin and Instagram to defraud investors before embezzling their funds.

This indictment is the SEC’s first enforcement action alleging this type of fraud,” the regulator said, as quoted by News.bitcoin.com, Wednesday (18/9/2024).

SEC Enforcement Division Director Gurbir S. Grewal said that relationship investment fraud, including those involving crypto asset investments, poses a significant risk of loss to retail investors, and the threat is increasing rapidly as these frauds become more popular.

“In both cases, we suspect that fraudsters created fake crypto ecosystems that presented false information to investors,” Grewal said.

The complaint revealed that participants in the NanoBit scheme, which operated from October 2023 to June 2024, posed as financial professionals on WhatsApp to lure investors to a fake crypto trading platform, siphoning off more than $2 million or Rp. 30.7 billion.

In the second case, from July 2022 to December 2023, Coinw6 participants used social media to develop romantic relationships with victims, ultimately persuading them to invest in fake crypto products.

“When investors tried to withdraw their alleged profits, the scammers allegedly demanded additional payments for taxes or fees, told investors that crypto assets were frozen as part of a law enforcement investigation, or tried to blackmail them using compromising romantic communications via WhatsApp,” the SEC said.

In response to the findings, the SEC has filed suit against both schemes, seeking civil penalties and a permanent injunction.

“Our allegations serve as a reminder to the public to be more vigilant about potential scams involving investment opportunities promoted by strangers on social media,” Grewal said.