SEC Charges 8 Individuals in $2M Crypto Fraud Linked to NanoBit and CoinW6 Scams

The U.S. Securities and Exchange Commission (SEC) has charged five entities and three individuals for orchestrating crypto fraud schemes linked to fake investment platforms, NanoBit and CoinW6.

The defendants allegedly used social media apps like WhatsApp, Instagram, and LinkedIn to gain investors’ trust before defrauding them out of millions.

According to the SEC’s complaints, the scammers built personal relationships with the victims, posing as financial experts or wealthy professionals.

Once trust was established, they convinced investors to fund fraudulent crypto platforms under the promise of high returns. The SEC has highlighted this case as their first enforcement action against what they call “relationship investment scams.”

🚨JUST IN:
The #SEC has charged two fake crypto platforms, #NanoBit and #CoinW6, with running "relationship investment scams." Using social media to lure investors, the platforms allegedly stole money and lied to investors. #WikiBit #Blockchain #cryptocurrency #CryptoSecurity pic.twitter.com/2Ju8fIg4vZ

— WikiBit Official (@WikiBitOfficial) September 18, 2024

Gurbir Grewal, Director of the SEC’s Enforcement Division, emphasized the growing threat of these types of scams, stating, “Relationship investment scams, including those involving crypto assets, pose a risk of catastrophic harm to retail investors, and the threat is rapidly increasing.”

He urged the public to be vigilant and cautious of any investment offers made by strangers through social media platforms.

Details of the NanoBit and CoinW6 Scams: Deception and Misappropriation

In the case of NanoBit, from October 2023 to June 2024, scammers posed as financial experts on WhatsApp, claiming ties to an SEC-registered broker.

They promoted fake initial coin offerings (ICOs), misappropriating over $2 million in funds. The fraudsters then transferred the money to Hong Kong-based accounts, where it was used to steal investors’ cryptocurrency assets.

Meanwhile, the CoinW6 scam, running from July 2022 to December 2023, involved scammers posing as wealthy professionals on LinkedIn and Instagram.

The @SECGov lays its eyes on a new division of #crypto scams! 🚨

🇺🇸The US regulator convicted 5 institutions & 3 individuals including trading platforms NanoBit & CoinW6 for relationship-related crypto investment scams.

📌The convicts seemed to develop personal relationships… pic.twitter.com/UU8pQBI0w9

— TheNewsCrypto (@The_NewsCrypto) September 18, 2024

Using platforms like WhatsApp, they built romantic connections with investors, persuading them to invest in CoinW6 with the promise of daily returns of up to 3%. However, the platform was entirely fabricated, and the victims’ investments were never returned.

These fraudulent schemes represent a new wave of crypto scams that focus on personal relationships and trust, making them more difficult to detect than traditional online fraud.

Romance Scams Drive Surge in Crypto Fraud: $3.5 Billion in Losses in 2023

The growing prevalence of romance scams and similar frauds is contributing to a dramatic rise in cryptocurrency-related crime.

According to Chainalysis, scams like these—often referred to as “pig butchering scams”—have resulted in significant financial losses. Revenues from these scams nearly doubled from the previous year, increasing 85-fold since 2020.

Cryptocurrency scams have become a significant issue, with losses totaling $3.94 billion in the U.S. alone in 2023, according to the FBI. The Better Business Bureau (BBB) has also identified cryptocurrency fraud as the riskiest type of scam, with victims losing thousands of…

— 𓂀 𝕋𝔼𝔸ℍ 𓂀 (@TeahCartel) September 17, 2024

Additionally, the FBI’s Internet Crime Complaint Center reported over 40,000 cases of cryptocurrency fraud in 2023, including romance scams.

This led to total losses exceeding $3.5 billion, with a significant portion of that stemming from scams like NanoBit and CoinW6.

• Key Statistics (2023):

  • Over 40,000 reported cases of cryptocurrency fraud.
  • Losses from romance scams and other fraudulent activities totalled $3.5 billion.
  • Romance scams specifically have surged by 85 times since 2020.

The SEC’s action against the operators of NanoBit and CoinW6 serves as a critical reminder for investors to exercise caution when approached with investment offers, particularly those initiated through social media platforms.

Fraudsters are increasingly exploiting personal connections to deceive victims, making it vital for investors to thoroughly vet investment opportunities and the individuals offering them.

Conclusion: A Cautionary Tale for Crypto Investors

The SEC’s charges against the individuals behind NanoBit and CoinW6 highlight a growing trend in crypto fraud where scammers leverage personal relationships to defraud unsuspecting victims.

As the rise of relationship investment scams continues, investors are urged to remain vigilant, especially when approached on social media platforms by individuals claiming to be financial experts or wealthy professionals.

With losses exceeding $3.5 billion in 2023 alone, it’s clear that these types of scams pose a significant threat to the retail investor community.