The US Securities and Exchange Commission (SEC), a government agency that protects investors and ensures fair financial markets (read more here), has accused several companies of running a huge scam. These companies claimed they were operating legal platforms for trading cryptocurrencies and targeted small investors using social media. However, according to the SEC, their operations were actually a fraud.
The companies named by the SEC are Morocoin Tech Corp., Berge Blockchain Technology Co. Ltd., and Cirkor Inc. Alongside these, there were four so-called “investment clubs”: AI Wealth Inc., Lane Wealth Inc., AI Investment Education Foundation Ltd., and Zenith Asset Tech Foundation. Altogether, they reportedly stole over $14 million from investors, most of whom were people from the United States.
The SEC said these fraudulent activities took place from January 2024 to January 2025. Unfortunately, this scam resembled other modern frauds commonly seen on the internet.
Fake Crypto Platforms, Real Losses
The SEC explained how these scammers tricked people: First, they made advertisements on popular social media platforms (what is social media?) to grab attention. In these ads, they promised easy money and smart investment advice supposedly generated by advanced artificial intelligence (AI) (how AI works in investments). They then invited interested people to private group chats through WhatsApp, a popular messaging app (learn about WhatsApp).
In these chats, the scammers pretended to be financial experts. They shared fake stories and tips about how their ‘AI-powered trading’ was bringing them big profits. This way, they gained the trust of their victims.
Once they won investors’ trust, they persuaded people to create accounts on their fake cryptocurrency trading platforms. These platforms were run by the companies mentioned earlier—Morocoin, Berge, and Cirkor. The platforms claimed to be fully licensed and approved by the government, which turned out to be false. Additionally, the investment clubs also claimed they were offering “Security Token Offerings” (what is an STO?), which are investments backed by real companies. However, the SEC discovered that these companies and investment offerings were entirely made up, and no actual trading ever happened.
When investors tried to withdraw their money from these so-called platforms, the scammers asked for additional fees upfront before processing the withdrawals. This is a well-known tactic used by scammers to cheat victims further. In the end, all the money was taken from the victims and transferred overseas using complicated methods like bank transactions and cryptocurrency wallets.
AI and Fraud – A Growing Problem
Aside from using fake AI investment advice, the SEC noted that scammers are now increasingly using advanced AI tools like deepfakes. Deepfakes are realistic-looking videos or audio files created with artificial intelligence that can manipulate real content (learn about deepfakes). For example, scammers have used videos that seemed to show tech leaders like Elon Musk supporting their fake investment schemes. These videos make the scams appear more believable to potential victims.
Fraudsters are also abusing AI in other ways. For example, they use AI to bypass “Know Your Customer” (KYC) checks. KYC is a process financial companies use to verify who they are dealing with to avoid illegal activities, such as money laundering (what is KYC?). Additionally, scammers use AI tools to create fake customer support chats or replicate website dashboards to make their platforms look trustworthy.
Sometimes, they even hijack Zoom meetings, sending fake invites with harmful software links meant to trick participants.
What the SEC Says
Commenting on the case, Laura D’Allaird, the head of the SEC’s Cyber and Emerging Technologies Unit, said the scam had multiple steps. First, the fraudsters posted ads on social media platforms. Then, they built victims’ trust by pretending to be experts in WhatsApp group chats, where they shared fake AI-generated investment tips. Finally, they convinced victims to invest money in fake cryptocurrency trading platforms. Unfortunately, all the money was stolen, according to the SEC.
Cases like this highlight how important it is to be cautious about where you invest your money and to verify whether financial opportunities are legitimate. While cryptocurrencies can offer exciting prospects, they also carry risks of scams (read about cryptocurrency). Fraud like this reminds us of the need to carefully check details before making any financial commitments.