The US Securities and Exchange Commission (SEC) has pursued legal actions against eight individuals and officers affiliated with two bogus crypto-related firms, NanoBit and CoinW6.
These charges were made on September 17, 2024, and are the first enforcement steps taken by the SEC concerning what they term ‘relationship investment scams’ in the crypto market. The complaints revolve around organized schemes to deceive social media users into investing in a certain venture through misleading information.
Details of the Allegations
The SEC’s complaints outline how NanoBit and CoinW6 operated as scams that relied on familial trust to target investors. NanoBit was active from October 2023 to June 2024, when fraudsters impersonated financial advisors through the WhatsApp application.
According to the charges, they deceived victims into believing they worked under an SEC-registered broker and sold fraudulent ICOs. These fraudulent activities led to the embezzlement of over $2 million, which was moved to accounts in Hong Kong as the investors lost their cryptocurrency investments.
However, the CoinW6 transition to scam occurred between July 2022 and December 2023. This scheme involved people being presented online as fake wealthy business professionals on platforms such as LinkedIn and Instagram.
They used the female contacts to lure potential investors through romantic relationships through WhatsApp, encouraging them to invest in a fake platform promising daily returns of up to 3%. These complaints made by the SEC pointed out that these interactions were aimed at building the necessary trust to deceive the investors out of their money.
Upcoming Relationship Investment Scams
According to Gurbir Grewal, the Director of the SEC’s Enforcement Division, relationship investment scams present increasing threats to retail investors. In his statement, Grewal highlighted that the SEC’s actions are a very important reminder about such frauds, especially those committed in the cryptocurrency sector. He described it as, “Relationship investment scams, including those associated with crypto asset investments, are likely to cause very significant losses to a range of retail investors, and the threat is growing swiftly.
As technology develops, fraudsters use social networks to create real-looking investment plans. Grewal stressed the need to be careful while making a decision, especially when receiving such requests from strangers through the internet. The SEC’s discoveries demonstrate a growing susceptibility in investors, especially with the rising trend in the use of cryptocurrencies.
