The US Securities and Exchange Commission (SEC) has charged five entities and three individuals involved in two crypto-related scams—NanoBit and CoinW6—that defrauded investors through deceptive "relationship investment" tactics. These enforcement actions mark the SEC’s first crackdown on this growing form of fraud.
On Tuesday, the SEC announced that the defendants used social media to manipulate investors, building trust before exploiting them. The scams were orchestrated through platforms like WhatsApp, LinkedIn, and Instagram.
Deceptive ecosystems targeting retail investors
According to Gurbir Grewal, Director of the SEC's Enforcement Division, these scams represent an increasing threat to retail investors, particularly in the crypto space. Grewal emphasised the growing popularity of these schemes among fraudsters and highlighted the severe risks involved. The SEC accuses the perpetrators of constructing elaborate fake crypto ecosystems, complete with false promises and misleading information.
The scams involved tricking individuals into funding non-existent crypto platforms under the guise of investment opportunities. These cases serve as a public warning about the dangers of accepting investment offers from strangers on social media.
NanoBit and CoinW6 scams exposed
The NanoBit scam ran from October 2023 to June 2024. The SEC alleges that scammers posed as financial experts on WhatsApp, fraudulently claiming connections to an SEC-registered broker. They promoted fake initial coin offerings (ICOs) and misappropriated over $2 million, transferring the funds to Hong Kong-based accounts.
Separately, the CoinW6 scam, operating from July 2022 to December 2023, used similar tactics. Scammers posed as wealthy professionals on LinkedIn and Instagram. They built romantic connections with victims on WhatsApp, promising daily returns of up to 3% on investments in the fraudulent CoinW6 platform.
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Romance scams driving crypto fraud surge
Romance scams, including “pig butchering scams,” have significantly contributed to the rise of crypto fraud. Chainalysis reports that revenues from these scams almost doubled in 2023, growing by 85 times since 2020.
According to the FBI’s Internet Crime Complaint Center, more than 40,000 cases of crypto fraud, including romance scams, were reported in 2023, with losses surpassing $3.5 billion.
related reading：SEC accuses Brothers of orchestrating $60 million Ponzi crypto scam using crypto bot that falsely claimed 13.5% monthly return rate
SEC enforcement highlights growing risks
The SEC’s actions highlight the increasing sophistication of crypto-related fraud schemes. With new forms of deception emerging, retail investors must remain vigilant against such scams, which are designed to exploit trust in both personal relationships and investment opportunities.
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