US SEC cracks down on financial scams on social media
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For years now, the number and severity of financial frauds and scams originating on social media have been growing around the world. Various entities have been getting involved with attempts to prevent them from happening, or at least soften the blow, and now, the US Securities and Exchange Commission (SEC) has decided to enter the arena as well.
According to the US securities regulator, there have been multiple entities that the regulator has already charged for their involvement in illegal activities. The SEC said five entities and three individuals were charged in connection with two relationship investment scams that involved fake crypto trading platforms, NanoBit and CoinW6, respectively.
The regulator explained that both companies lied to gain the trust of investors only to steal their money. These scams are often referred to as “pig butchering,” and are quite rampant. Commenting on the matter, the SEC’s Director of the Division of Enforcement, Gurbir Grewal, said that relationship investment scams, including the ones involving crypto investments, bring massive risk of catastrophic harm to retail investors.
He added that the threat is growing rapidly, as the scams continue to become more and more popular with fraudsters.
The NanoBit Scam Deceived Investors Over A Long Period Of Time
The regulator’s complaint against NanoBit says that the fake exchange impersonated financial industry professionals using various WhatsApp groups to build investors’ trust. It did so from October 2023 until June 2024. In time, investors became trustworthy enough to solicit their investments through the exchange, which promoted itself as an affiliate to a regulated platform.
The alleged perpetrators also promoted a fake ICO, according to the SEC, promising major returns on investment. But, the SEC was able to confirm that the NanoBit platform was fake, and after it accepted $2 million in investments from its victims, the money was transferred to a bank account in Hong Kong.
Apart from this, the regulator also said that the fake exchange misappropriated hundreds of thousands of dollars worth of crypto assets belonging to deceived investors.
CoinW6 Tricked And Even Blackmailed Investors
The regulator also pointed out another fraudulent platform known as CoinW6. This one operated between July 2022 and December 2023, with the scammers presenting themselves as “young, wealthy professionals.” They then proceeded to approach prospective investors on Instagran and LinkedIn, even pursuing romantic relationships using WhatsApp.
The scheme revolved around gaining the trust of potential victims, and then proposing an investment deal that would give them up to a 3% return per day. They said that the returns would come from crypto mining, staking, or yield farming.
The SEC alleged that the scammers demanded additional payments from inventors at the time of withdrawals, stating that the law enforcement inquiry froze the existing assets. Some, who engaged in romantic chats, even blackmailed their victims into providing more money. Grewal stated that in both cases, the scammers created fake crypto ecosystems that provided investors with fake information.
