The United States Securities and Exchange Commission says it has taken its first-ever action against crypto “pig butchering” scammers, charging two allegedly “fake crypto asset trading platforms.”
The SEC sued five entities and three people it said were connected to the alleged fake exchanges NanoBit and CoinW6, accusing them of stealing nearly $3.2 million after gaining investors’ trust and pursuing relationships with them via social media, according to a Sept. 17 statement.
“These charges are the SEC’s first enforcement actions alleging these types of scams,” the SEC added.
“In these two cases, we allege that fraudsters created fake crypto ecosystems that displayed false information to investors,” said the SEC’s Division of Enforcement director Gurbir Grewal.
Today we charged multiple entities and individuals in connection with two relationship investment scams involving fake crypto asset trading platforms NanoBit and CoinW6, respectively. https://t.co/TSNv0X8aN8 pic.twitter.com/cSPhTQt3Aj
— U.S. Securities and Exchange Commission (@SECGov) September 17, 2024
Grewal added the threat of such relationship investment scams “is increasing rapidly as these scams become more popular with fraudsters,” with the cases a reminder “to be on heightened alert” about investments promoted by strangers online.
Scammers pretended to be “attractive” pros, claims SEC
The SEC sued CoinW6 on Sept. 17 in a California federal court, alleging it perpetrated a scheme with “a web of individuals” passing as “young, attractive professionals” who defrauded at least 11 investors out of over $2.2 million.
The accused scammers contacted investors on LinkedIn and Instagram, aiming to eventually pursue romantic relationships over WhatsApp between July 2022 and December 2023, the SEC claimed.
The regulator alleged the scammers convinced investors to open CoinW6 accounts, claiming they could earn up to 3% daily returns from its staking, mining and yield farming products which the SEC said “were entirely fictitious.”
Investors trying to withdraw funds were allegedly met with demands for additional payments for taxes and fees or were blackmailed with threats that their private romantic WhatsApp messages would be leaked to family or friends.
The SEC claimed one unnamed investor refused to send additional funds for a security deposit over a purported law enforcement order and was blackmailed with threats that their intimate messages would be leaked to their family.
A collection of messages allegedly sent to one investor claiming their messages would be shared publicly. Source: SEC
The SEC simultaneously sued NanoBit and six others in a New York federal court on Sept. 17, similarly claiming they defrauded at least 18 people out of around nearly $968,000 by “posing as financial industry professionals in WhatsApp groups.”
The regulator alleged that between October 2023 and June this year, Nanobit and others lured investors to use the platform by claiming its affiliate — NanobitUS Securities — was an SEC-registered broker to build trust.
The SEC claimed they also shilled “entirely fake” initial coin offerings, and the regulator alleged the NanoBit platform itself was fake and, in reality, wired investor funds to bank accounts in Hong Kong.
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When investors went to withdraw funds from NanoBit, they were hit with additional fees and excuses for why they couldn’t — one unnamed investor was told they couldn’t withdraw funds because they owed nearly $11,000 for “Ghana miners fees,” according to the complaint.
Highlighted excerpt of the SEC’s complaint against NanoBit alleging an investor was unable to withdraw funds. Source: CourtListener
The SEC charged both CoinW6 and NanoBit with violating securities law antifraud provisions. CoinW6 was additionally charged with offering and selling unregistered securities.
The SEC is seeking permanent injunctions, penalties and disgorgement with prejudgment interest against both entities.
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