The U.S. Securities and Exchange Commission (SEC) has filed charges against a criminal network operating through fictitious trading platforms. This coordinated group executed an AI-based cryptocurrency scam that affected hundreds of retail investors, defrauding over $14 million. According to Laura D’Allaird, chief of the SEC’s Cyber and Emerging Technologies Unit, the fraudsters used advanced technological narratives to effectively lure their victims into the trap.
The scheme relied on intensive social media advertising and private messaging groups. The criminals promoted alleged investment clubs offering financial tips generated by smart algorithms to build credibility. Thus, the attackers posed as financial sector professionals in WhatsApp chats to manipulate user decisions. Likewise, the AI-based cryptocurrency scam directed individuals toward fraudulent platforms such as Morocoin Tech Corp. and Berge Blockchain recently.
Despite promises of high returns, regulators confirmed that no real trading activity took place. Investigations indicate that the funds deposited by users were diverted immediately to offshore accounts in an illegal manner. Furthermore, the fake platforms demanded additional fees when victims attempted to withdraw their money to continue stealing capital. Therefore, the network of digital wallets facilitated the laundering of stolen assets systematically over several months.
This is the fake investment clubs operate to deceive traditional investors
The so-called “investment clubs” functioned as the first point of contact to recruit less experienced savers. Through the use of complex technical terms and security promises, the fraudsters managed to build a bond of trust with their potential victims. On the other hand, the AI-based cryptocurrency scam included the offering of entirely fictitious “Security Token Offerings” (STO) within these communities. Thus, the deception spread through false testimonials inside the WhatsApp groups every single day.
The SEC identified entities such as AI Wealth Inc. and Zenith Asset Tech Foundation as the main recruitment engines. These groups operated in a coordinated manner for at least a year before being detected by federal authorities. Consequently, the sophistication of the fraud complicated the immediate recovery of assets diverted to other international jurisdictions. However, the legal action seeks to impose civil penalties and the full return of interest accrued from this fraudulent scheme.
What impact will this case have on the current regulation of digital assets?
The discovery of this massive fraud coincides with a transition period in the compliance policy of the U.S. regulator. Under the new administration, a reduction in enforcement actions has been observed against legitimate companies in the digital sector. Nevertheless, this case proves that oversight of direct fraud schemes remains an absolute priority for the federal agency. Additionally, the use of cryptocurrency as a vehicle for theft reinforces the need for more rigorous audits.
The regulatory body is now seeking permanent court orders to prevent these entities from operating in the market again. It is expected that international cooperation will be fundamental to track the capital that was sent outside national borders. In this way, the future of investor protection will depend on the responsiveness to hybrid technological frauds. Finally, the case highlights the importance of always verifying the license of any platform before making a significant investment today.
