U.S. Securities and Exchange Commission (SEC) has filed charges in a major cryptocurrency fraud case involving more than $14 million. The regulator says the scheme used fake AI-themed investment tips to attract retail investors. These tips were promoted as advanced and data-driven. In reality, the SEC says the entire operation was fraudulent.
According to the SEC, the case targets three entities that claimed to be legitimate crypto trading platforms. These platforms presented themselves as professional and technology-driven. However, investigators found that no real trading ever took place. The platforms were allegedly created only to collect investor funds.
The SEC also charged four investment clubs that worked closely with the fake platforms. These groups claimed to offer education and wealth-building opportunities. They promoted themselves as expert-led communities using artificial intelligence for smarter investing. The SEC says these claims were false and misleading.
The alleged scam relied heavily on social media and messaging apps. Investors were first drawn in through online advertisements. They were then invited into private group chats, often on WhatsApp. Inside these groups, scammers posed as financial experts and shared fake AI-based investment advice.
Once trust was established, investors were encouraged to open accounts on the fake platforms. They were told their money would be used for special “Security Token Offerings.” These offerings were described as exclusive and highly profitable. The SEC says these token offerings did not exist at all.
Victims were shown fake account balances that appeared to grow over time. This gave the impression that their investments were successful. When investors tried to withdraw their money, they were blocked. In some cases, they were asked to pay extra fees to access their funds.
The SEC says the scheme operated from at least January 2024 through January 2025. During this period, more than $14 million was collected from investors. The money was not invested as promised, according to the complaint. Instead, it was allegedly misused by the defendants.
In its filing, the SEC charged the defendants with violating key U.S. securities laws. The regulator is seeking permanent bans, financial penalties, and the return of investor funds. Officials warned that fraudsters are increasingly misusing AI buzzwords to appear credible. Investors were urged to stay cautious and verify all investment claims carefully.
Stay alert, and keep your security measures updated!
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