SEC Files Lawsuits Against Alleged Crypto Scam Operators

According to CoinDesk, the U.S. Securities and Exchange Commission (SEC) has initiated legal action against three individuals and five companies for allegedly running 'pig butchering' scams. These scams involve fraudsters befriending victims through text-based social media apps, gaining their trust, and convincing them to invest large sums in fictitious crypto platforms before stealing their funds and disappearing. The two lawsuits filed on Tuesday mark the SEC’s first enforcement actions against this type of crypto scam. This move comes just a day before the U.S. House Financial Services Committee is scheduled to hold a hearing on pig butchering scams. Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, emphasized the increasing threat of such scams to retail investors, noting that fraudsters create fake crypto ecosystems displaying false information to deceive investors. One lawsuit targets the purported crypto trading platform NanoBit. The SEC alleges that three U.S. residents—Jiajie Liu, Fei Liao, and Hua Zhao—engaged in a coordinated scheme to defraud at least 18 investors of nearly $1 million in crypto assets and fiat currency. The accused allegedly posed as finance industry professionals in WhatsApp groups, enticing investors to put their money into NanoBit’s platform. Despite showing apparent profits, investors found themselves unable to withdraw their funds, and the fraudsters vanished. The second lawsuit involves another fake crypto trading platform, CoinW6. The SEC claims that unnamed participants defrauded at least 11 investors out of $2.2 million between July 2022 and December 2023. Unlike the NanoBit scheme, CoinW6 fraudsters allegedly posed as 'young, attractive professionals' who developed romantic relationships with victims over text before introducing the idea of investing in CoinW6. The scammers pressured victims to invest more money, sometimes even suggesting they withdraw from retirement accounts or borrow from friends and family. A recent FBI report highlighted the severity of crypto fraud, revealing that investors lost a record-high $5.6 billion to such scams last year, with $4 billion lost to investment scams, including pig butchering scams.