- SEC files first charges for relationship scams with losses over $2M through NanoBit.
- CoinW6 accused of offering up to 3% daily returns in fraudulent crypto scam.
- SEC warns of social media-based investment scams after suing NanoBit and CoinW6.
The U.S. Securities and Exchange Commission (SEC) has officially charged two allegedly fraudulent cryptocurrency platforms, NanoBit and CoinW6, with deceiving investors and siphoning funds in what is being marked as the agency’s inaugural enforcement actions against relationship investment scams.
These charges, lodged on Tuesday, target five entities and three individuals spread across two significant legal complaints filed in the U.S. District Courts for the Eastern District of New York and the Central District of California.
The SEC claims that the accused parties used social networking applications such as What-app, linked in, and Instagram to gain the trust of potential investors posing as financial gurus or affection seekers. Recently, the SEC Division of Enforcement’s Director, Gurbir S. Grewal, noted the increased use of deceptive social interaction-based scams, noting that they present existential risks to retail investors.
Details of the Alleged Scams
The complaint against NanoBit alleges that from October 2023 to June 2024, individuals involved in the scam impersonated financial industry professionals to solicit investments via WhatsApp. They falsely claimed that NanoBit, alongside its affiliate NanobitUS Securities, was an SEC-registered broker, luring investors with promises of substantial returns from fabricated initial coin offerings (ICOs). The SEC claims that instead of generating returns, the collected funds were redirected to personal accounts, with over $2 million being wired to Hong Kong.
On the other hand, the CoinW6 scam reportedly operated from July 2022 through December 2023. Perpetrators, posing as affluent young professionals on LinkedIn and Instagram, engaged victims in romantic dialogues over WhatsApp to build trust. They then enticed the victims to invest in CoinW6’s non-existent crypto asset staking, mining, and yield farming products, promising up to 3% daily returns.
The SEC’s filings reveal that when investors attempted to withdraw their profits, they were met with demands for additional fees or were blackmailed with their own romantic communications used as leverage.
Legal Actions and Warnings to Investors
The legal actions include permanent injunctions, money damages of the amount earned by or for the involved parties with prejudgment interest, and civil penalties. The SEC has accused NanoBit and CoinW6 of several violations of the antifraud provisions of federal securities laws. Along with the complaints, the SEC’s Office of Investor Education and Advocacy together with many other regulatory agencies subsequently provided an Investor Alert to the public on how the scams work and to be more cautious.
These enforcement actions remain part of a larger crackdown campaign by U.S. regulators such as CFTC and FINRA against fraudulent behaviors in the crypto space. The SEC hopes investors will keep actively engaged and use reliable tools like Investor. gov to check for fraudulent schemes in investment platforms and backgrounds of people offering them.
