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SEC Targets First Crypto Romance Scams, Sues Fake Exchanges
The U.S. Securities and Exchange Commission (SEC) has taken its first action against a crypto scam known as “pig butchering,” where scammers build fake relationships with victims to steal their money. The SEC charged two fake crypto exchanges, NanoBit and CoinW6, accusing them of fraud.
Fake Crypto Exchanges Targeted by the SEC
On September 17, the SEC filed lawsuits against five companies and three individuals linked to these exchanges. According to the SEC, these scammers used social media to gain investors’ trust, eventually stealing nearly $3.2 million.
The SEC’s Director of Enforcement, Gurbir Grewal, highlighted that these types of scams are on the rise, urging people to be cautious of online investment offers, especially from strangers.
How the Scams Worked
The SEC alleged that CoinW6 operated a scheme in which scammers posed as “young, attractive professionals” on social media platforms like LinkedIn and Instagram. They then moved the conversation to WhatsApp, pursuing romantic relationships with their victims between July 2022 and December 2023.
The scammers promised daily returns of up to 3% from fake crypto products like staking, mining, and yield farming. However, when investors tried to withdraw their funds, they were met with demands for extra payments or threats to leak private messages.
NanoBit’s Fraudulent Activities
The SEC also sued NanoBit in a separate case, alleging that it defrauded at least 18 people out of nearly $968,000. Scammers posed as financial professionals in WhatsApp groups and tricked investors into believing that NanoBit was a legitimate platform affiliated with an SEC-registered broker.
NanoBit promoted fake initial coin offerings (ICOs) and then funneled investors’ money into Hong Kong bank accounts. When investors tried to withdraw, they were blocked by demands for additional fees, such as one investor being told they owed $11,000 for “Ghana miners fees.”
SEC Seeks Legal Action
Both CoinW6 and NanoBit are charged with violating anti-fraud securities laws, with CoinW6 facing additional charges for selling unregistered securities. The SEC is pushing for permanent bans, penalties, and the return of stolen funds from both entities.
