SEC Takes Action Against Fraudulent Crypto Platforms and AI Investment Clubs in $14 Million Scam

The U.S. Securities and Exchange Commission (SEC) has initiated legal proceedings against a group of alleged false cryptocurrency trading platforms and self-styled AI investment clubs. They are accused of orchestrating a scheme that defrauded retail investors of over $14 million.

Key Takeaways:

The SEC has charged fake cryptocurrency platforms and AI-themed investment clubs involved in a $14 million scam targeting retail investors.
The fraudulent parties are said to have promoted bogus AI trading tips and platforms through social media and WhatsApp.
Regulators claim there was no actual trading taking place, and the investor funds were misappropriated and sent overseas.

According to a complaint lodged in federal court in Colorado, the SEC has implicated supposed crypto platforms Morocoin Tech Corp., Berge Blockchain Technology Co. Ltd., and Cirkor Inc., alongside investment clubs including AI Wealth Inc., Lane Wealth Inc., AI Investment Education Foundation Ltd., and Zenith Asset Tech Foundation.

The SEC alleges these entities collaborated in an "investment confidence scam" that heavily relied on social media marketing, messaging apps, and counterfeit crypto offerings.

SEC Highlights Usage of AI-Themed Scams to Attract Investors

The SEC reported that this scheme persisted from at least January 2024 to January 2025.

Investment clubs allegedly drew in investors through advertisements on social media platforms and subsequently shifted discussions to WhatsApp groups, where the fraudsters impersonated financial experts.

Within these chats, they disseminated what they claimed were AI-generated investment tips to generate credibility and trust.

Once they engaged investors, the scammers directed them to create and fund accounts on Morocoin, Berge, and Cirkor, which the SEC claims fraudulently represented themselves as licensed cryptocurrency trading platforms.

The defendants purportedly offered "security token offerings" that were marketed as being issued by legitimate companies.

However, regulators assert that no trading ever took place, the platforms were sham operations, and neither the token offerings nor the purported issuing companies existed.

When investors sought to withdraw their funds, the SEC claims the defendants imposed additional barriers, including demands for upfront fees, further depleting victims’ investments.

In total, at least $14 million was allegedly misappropriated from retail investors based in the U.S., which was transferred overseas through a network of bank accounts and cryptocurrency wallets, as detailed in the complaint.

"This case demonstrates a frequently seen type of investment scam," stated Laura D’Allaird, chief of the SEC’s Cyber and Emerging Technologies Unit. She emphasized that the case illustrates how fraudsters exploit AI-related claims and cryptocurrency narratives to target retail investors.

The SEC has charged the defendants with violating the anti-fraud regulations of the Securities Act of 1933 and the Securities Exchange Act of 1934. The agency is pursuing permanent injunctions, civil penalties, and recovery of ill-gotten gains with interest.

SEC Reduces Crypto Enforcement as Trump Resumes Presidency

It has been noted that the SEC has notably decreased its enforcement measures against the cryptocurrency sector since President Donald Trump returned to office.

Close to 60% of cases related to cryptocurrencies have been either dropped, suspended, or dismissed, while enforcement actions in traditional financial markets remain largely stable.

Prominent cases affected by this reduction include long-standing lawsuits against Ripple Labs and Binance.

In tandem with these changes, the leadership of the SEC is anticipated to further influence the agency’s regulatory approach.

Paul Atkins, a Republican appointee who is considered more favorable to market-driven regulation, is expected to continue serving as chair for the foreseeable future. However, the commission is bracing for the departure of its last Democratic member.