SEC Charges 8 in Connection to Fraudulent Crypto Platforms NanoBit and CoinW6
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The US Securities and Exchange Commission (SEC) charged five entities and three individuals behind two “relationship investment” scams tied to fake crypto platforms, NanoBit and CoinW6.
On Tuesday, the agency announced that the two complaints allege the defendants used social media apps to lure and deceive investors. They supposedly built trust with the investors before defrauding them. Notably, these charges are the SEC’s first enforcement actions against this type of scam.
“Relationship investment scams, including those involving crypto asset investments, pose a risk of catastrophic harm to retail investors, and the threat is increasing rapidly as these scams become more popular with fraudsters,” said Gurbir Grewal, Director at the SEC’s Enforcement Division.
He added that in both cases, the agency accuses the scammers of creating deceptive crypto ecosystems and providing false information to investors. These allegations, he noted, serve as a warning for the public to stay cautious of investment offers from strangers on social media.
SEC Accuses NanoBit and CoinW6 of Crypto Fraud and Investor Deception
The SEC accuses NanoBit scam participants of posing as financial experts on WhatsApp from Oct. 2023 to June 2024 to trick investors into funding a fake crypto platform. NanoBit falsely claimed ties to an SEC-registered broker and promoted fake initial coin offerings, misappropriating over $2m. This was then transferred to Hong Kong accounts and used to steal investors’ cryptocurrency.
Separately, from July 2022 to December 2023, the SEC alleges CoinW6 scammers posed as wealthy professionals on LinkedIn and Instagram. They supposedly built trust through romantic connections on WhatsApp, convincing investors to put money into the fake CoinW6 platform with false promises of daily returns up to 3%.
Romance Scams Drive Surge in Crypto Fraud, Losses Top $3.5B in 2023
In 2023, romance scams, especially “pig butchering scams,” fueled a sharp rise in illicit crypto activity, according to Chainalysis. Revenues from these scams nearly doubled from the previous year, increasing 85-fold since 2020.
Additionally, the FBI’s Internet Crime Complaint Center reported over 40,000 cases of cryptocurrency fraud, including romance scams, resulting in losses exceeding $3.5b in 2023.
