SEC Charges NanoBit and CoinW with Cryptocurrency "Relationship Investment Scam" Using Social Media
The U.S. Securities and Exchange Commission (SEC) has charged fake cryptocurrency platforms NanoBit and CoinW6 with defrauding investors and stealing their funds, marking the agency's first such allegations against this type of scam. On Tuesday, the SEC filed two lawsuits in the U.S. District Court for the Eastern District of New York and the U.S. District Court for the Central District of California against five entities and three individuals. Both lawsuits allege that investors were "lured" on social media, including via WhatsApp, LinkedIn, and Instagram, as part of a "relationship investment scam."
Gurbir S. Grewal, Director of the SEC's Division of Enforcement, said in a statement on Tuesday, “Relationship investment scams, including those involving investments in crypto assets, pose a risk of catastrophic harm to retail investors, and the threat is rapidly growing as these schemes gain in popularity among fraudsters.”
From October 2023 to June 2024, scammers posed as “financial industry professionals” in WhatsApp groups, getting customers to invest through a fake crypto platform called NanoBit. To convince investors the platform was safe, NanoBit falsely claimed that its affiliate company, NanobitUS Securities, was a registered broker with the SEC. These alleged financial professionals then touted a fake ICO, claiming it would offer investors significant returns. The funds were not used for investment but instead went to "scheme participants" who subsequently wired over $2 million to Hong Kong, China, through bank accounts.
As for CoinW6, the SEC stated that participants in this scheme pretended to be wealthy young professionals, connecting with victim investors via LinkedIn and Instagram, while also "pursuing romantic relationships on WhatsApp." These alleged scammers claimed that investors could earn up to 3% per day from CoinW6's stocks, mining, and other products. "In reality, investors’ funds were misappropriated, and their purported investments, profits, and account balances were fictitious," said the SEC. (The Block)
