The United States Securities and Exchange Commission (SEC) has announced its inaugural enforcement actions against scammers involved in crypto “pig butchering.” The agency has filed charges against two purportedly fraudulent cryptocurrency trading platforms.
In this legal move, the SEC has brought suit against five entities and three individuals allegedly linked to the fake exchanges, NanoBit and CoinW6. According to a statement released on September 17, these parties are accused of misappropriating nearly $3.2 million after establishing trust with investors and cultivating connections through social media.
“This marks the SEC’s first enforcement actions targeting these specific scams,” the agency noted. Gurbir Grewal, director of the SEC’s Division of Enforcement, stated, “In these instances, we allege that con artists constructed counterfeit crypto ecosystems designed to mislead investors with false information.” He cautioned that the prevalence of such relationship-based investment scams is rapidly escalating, urging the public to remain vigilant regarding investment opportunities promoted by unknown individuals online.
**Scammers Posing as Attractive Professionals, SEC Claims**
On September 17, the SEC filed a lawsuit against CoinW6 in a federal court in California, alleging that it orchestrated a scheme involving “a network of individuals” masquerading as “young, attractive professionals.” These scammers are said to have defrauded at least 11 investors, amassing over $2.2 million.
According to the SEC, the fraudsters reached out to investors through LinkedIn and Instagram, ultimately seeking to develop romantic relationships via WhatsApp between July 2022 and December 2023. The agency claims the scammers persuaded investors to create accounts on CoinW6, promising daily returns of up to 3% from staking, mining, and yield farming products, which were entirely fabricated.
When investors attempted to withdraw their funds, they were allegedly confronted with demands for additional payments to cover taxes and fees, or were threatened with the exposure of personal messages shared on WhatsApp.
The SEC highlighted one instance where an unnamed investor refused to send extra funds for a security deposit in response to a supposed law enforcement directive and faced blackmail threats concerning the disclosure of intimate messages.
A collection of messages allegedly sent to one investor, indicating threats to share their private communications publicly. Source: SEC
Simultaneously, on September 17, the SEC also filed a lawsuit against NanoBit and six other individuals in a New York federal court, similarly alleging that they defrauded at least 18 victims out of nearly $968,000 by posing as financial professionals within WhatsApp groups.
The SEC claims that between October 2023 and June of this year, NanoBit and its associates enticed investors to use their platform by falsely asserting that their affiliate, NanobitUS Securities, was a registered broker with the SEC, creating an illusion of credibility.
Furthermore, the SEC alleged that these scammers promoted “entirely bogus” initial coin offerings while asserting that the NanoBit platform itself was a sham, funneling investor funds into bank accounts in Hong Kong.
When investors sought to withdraw their funds from NanoBit, they encountered additional fees and various excuses preventing the transactions. One unnamed investor was allegedly told they could not access their funds due to an outstanding balance of nearly $11,000 for “Ghana miners fees,” as noted in the complaint.
Highlighted excerpt from the SEC’s complaint against NanoBit, illustrating an investor’s inability to withdraw funds. Source: CourtListener
Both CoinW6 and NanoBit have been charged with violating antifraud provisions of securities law. Additionally, CoinW6 faces charges for offering and selling unregistered securities. The SEC is pursuing permanent injunctions, monetary penalties, and disgorgement with prejudgment interest against both entities.