- The US SEC charged three exchanges and four investment clubs for allegedly siphoning $14 million of retail investors’ funds.
- The defendants face a case for violating the anti-fraud provisions of US securities laws.
The US Securities and Exchange Commission (SEC) has recently filed a lawsuit against seven entities. The defendants were three purported crypto trading platforms, namely Morocoin Tech Corp., Berge Blockchain Technology Co. Ltd., and Cirkor Inc. It also included four investment clubs, namely AI Wealth Inc., Lane Wealth Inc., AI Investment Education Foundation Ltd., and Zenith Asset Tech Foundation.
The regulator alleged that the entities defrauded retail investors of more than $14 million. It filed the case at the US District Court of Colorado on Monday.
The SEC called their scheme “an elaborate investment confidence scam.”
How Their Scam Worked
According to the SEC, the alleged scammers employed a multi-step fraud that is now becoming all too common. Laura D’Allaird, Chief of the Cyber and Emerging Technologies Unit at the SEC, stated that their scheme started off with social media ads to capture the interest of potential victims. Then, they proceeded to build up rapport with people who inquired about or signed up for their offerings via group chats.
The fraudsters posed as financial professionals who supposedly used advanced AI (artificial intelligence) to get trading or investment insights, which promised guaranteed returns to users. Those who took the bait and invested their money in the scammers’ platforms eventually lost everything, as the operators of the purported crypto exchanges misappropriated their funds. The perpetrators never really traded any of the funds, and all their “Security Token Offerings” were fake or non-existent.
Investigators found that the investment club had been luring victims into the shady crypto trading platforms from January 2024 to January 2025. Meanwhile, Morocoin, Berge, and Cirkor all claimed to have secured the necessary government licenses to operate, giving victims a false sense of security.
The SEC’s Charges
The SEC filed a lawsuit against the erring parties for violation of the anti-fraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. The court filing sought permanent injunctions against the defendants to prevent them from continuing to operate their schemes.
Moreover, the regulator asked the court to impose civil penalties and disgorgement, with prejudgment interest, against the self-identified crypto trading platforms Morocoin, Berge, and Cirkor.
The agency’s Office of Investor Education and Assistance has already posted an investor alert to prevent people from further engaging with the platforms or with the individuals tied to the case.
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