The United States Securities and Exchange Commission (SEC) has announced its first-ever action against scammers involved in fraudulent cryptocurrency trading platforms. The SEC has filed a lawsuit against five entities and three individuals connected to the alleged fake exchanges NanoBit and CoinW6. These scammers are accused of stealing nearly $3.2 million from investors who trusted them and engaged with them through social media platforms. The SEC stated that these charges mark their first enforcement actions against such scams. Gurbir Grewal, the director of the SEC’s Division of Enforcement, emphasized that the threat of these relationship investment scams is rapidly increasing and urged investors to be cautious when dealing with strangers online.
According to the SEC, CoinW6, which was sued on September 17 in a California federal court, employed a group of individuals who posed as young professionals and defrauded at least 11 investors out of over $2.2 million. These scammers made contact with investors on LinkedIn and Instagram and initiated romantic relationships over WhatsApp between July 2022 and December 2023. The SEC alleged that the scammers convinced investors to open CoinW6 accounts by promising daily returns of up to 3% through staking, mining, and yield farming products, which turned out to be entirely fictitious. When investors attempted to withdraw their funds, they were asked to make additional payments for taxes and fees, or they were threatened with the release of their private WhatsApp messages to their families and friends. The SEC cited the case of one investor who refused to send additional funds for a security deposit and was blackmailed with the threat of leaking their intimate messages to their family.
In a separate lawsuit filed on the same day in a New York federal court, the SEC sued NanoBit and six others for allegedly defrauding at least 18 individuals out of nearly $968,000. These scammers pretended to be financial industry professionals in WhatsApp groups and enticed investors to use the platform by claiming that its affiliate, NanobitUS Securities, was a registered broker with the SEC. The SEC further alleged that they promoted entirely fake initial coin offerings and that the NanoBit platform itself was fake. Instead of investing the funds, the scammers wired the money to bank accounts in Hong Kong. When investors attempted to withdraw their funds from NanoBit, they were faced with additional fees and excuses for why they couldn’t access their money. One investor was told that they owed nearly $11,000 for “Ghana miners fees,” preventing them from withdrawing their funds.
The SEC has charged both CoinW6 and NanoBit with violating securities law antifraud provisions, and CoinW6 has also been charged with offering and selling unregistered securities. The SEC is seeking permanent injunctions, penalties, and disgorgement with prejudgment interest against both entities.
Overall, these enforcement actions by the SEC highlight the increasing prevalence of cryptocurrency scams and the need for investors to exercise caution when engaging in online investments.