The US Securities and Exchange Commission (SEC) has taken an important step against fraud in the cryptocurrency world. Lastly, the SEC, which came to the fore with the accusations against two fake cryptocurrency platforms named NanoBit and CoinW6, targeted these platforms on the grounds that they defrauded investors through “relationship investment scams” carried out on social media. This case is the SEC’s first criminal complaint against this type of fraud attempt and has resonated in the crypto world.
SEC filed two separate cryptocurrency complaints
The SEC filed two separate complaints targeting five organizations and three individuals in the courts in the Eastern District of New York and the Central District of California. In these complaints, it is alleged that the scammers lured their victims into their networks through social media platforms such as WhatsApp, LinkedIn and Instagram. The victims were lured into losing their money by the attractive investment opportunities offered by the scammers.
Social media fraud is becoming an increasing problem, especially in cryptocurrency investments. Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, emphasized that such scams pose a great danger to individual investors. “Relationship investment scams involving crypto asset investments pose a risk of devastating losses to investors. As scammers continue to make these methods increasingly popular, the threat is rapidly increasing,” Grewal said.
The issue of “romance” scams
In the cryptocurrency world, these types of scams, called romance scams, have become a significant threat in recent years. In this scam method, scammers create emotional connections with investors using fake identities to encourage them to invest. It is estimated that victims worldwide lost approximately $75 billion due to this type of scam between 2020 and 2024. The rapid increase in such cases has prompted regulatory agencies to take action.
Last week, the U.S. Commodity Futures Trading Commission (CFTC) announced that it was collaborating with the SEC and other federal regulators to take action against such scams. Strengthening federal and state coordination against this growing threat is seen as a critical step to ensure the security of the crypto industry.
NanoBit and CoinW6: A new threat in the crypto world
NanoBit is one of the most notable cases of fraudsters targeting victims via social media. The fraudsters posed as financial sector professionals in WhatsApp groups and convinced investors to invest through NanoBit from October 2023 to June 2024. NanoBit falsely claimed to be affiliated with NanobitUS Securities, an SEC-registered broker, and promoted fake initial coin offerings promising huge returns. However, the truth was very different; investors’ funds were transferred to bank accounts in Hong Kong by the fraudsters, who siphoned off more than $2 million.
CoinW6 took the romance scam to a new level. The fraudsters posed as wealthy young professionals and contacted the victims via LinkedIn and Instagram. They then established romantic relationships via WhatsApp and directed investors to a cryptocurrency platform called CoinW6. CoinW6 promised daily returns of up to 3% through staking and mining products. However, it was all a scam. The profits and balances in the investors’ accounts were completely fictitious. When the victims tried to withdraw their money, they were faced with additional fees and were deceived by the lie that their assets had been frozen by the authorities.
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