On December 22, 2025, the U.S. Securities and Exchange Commission (SEC) filed a consequential lawsuit alleging that three purported crypto trading platforms and four investment clubs orchestrated an elaborate fraud scheme that defrauded retail investors of more than $14 million. According to the regulatory complaint, the scheme blended social media outreach, private messaging channels, and fraudulent claims about AI-powered investment strategies to lure unsuspecting investors into sham platforms, where funds were misappropriated and even routed overseas. (SEC)
This enforcement action reflects the SEC’s ongoing commitment to protect investors against increasingly sophisticated digital scams and highlights the vulnerabilities retail investors face in a rapidly evolving crypto ecosystem.
Before we delve deeper, if you are navigating crypto markets or considering digital asset investing, we recommend reviewing fundamentals like “What Is Cryptocurrency?” on Investopedia for foundational context.
Who Were the Defendants in the SEC Complaint?
The complaint names seven entities as defendants. Three of these were presented as crypto asset trading platforms — Morocoin Tech Corp., Berge Blockchain Technology Co. Ltd., and Cirkor Inc. Meanwhile, four organizations operated as purported investment clubs: AI Wealth Inc., Lane Wealth Inc., AI Investment Education Foundation Ltd., and Zenith Asset Tech Foundation. (SEC)
These defendants, the SEC alleges, did not operate genuine crypto markets or provide legitimate investment services. Instead, they designed and promoted a coordinated investment scam, leveraging trust-building tactics and deceptive claims to extract funds from U.S. retail investors. (The Block)
How the Alleged Scheme Functioned
Rather than a traditional Ponzi or pyramid fraud, the SEC’s complaint describes this as an “investment confidence scam.” The scheme evolved in several phases:
1. Luring with Social Media Ads
The investment clubs reportedly advertised aggressively on platforms like Facebook, Instagram, and Telegram to attract prospective investors. These ads promised access to premium investment opportunities and touted the clubs’ ability to generate superior returns through cutting-edge technologies. (SEC)
2. Moving Conversations to WhatsApp Groups
Once individuals responded to ads, they were moved into private WhatsApp group chats, where individuals posing as financial professionals — often described as experienced traders — shared purported AI-generated investment tips. This tactic was meant to build credibility and create the impression that members were joining a trusted community. (SEC)
3. Steering Investors Toward Fraudulent Trading Platforms
After establishing rapport and planting expectations of profit, these group administrators directed investors to open accounts on the three alleged trading platforms — Morocoin, Berge, and Cirkor. Each platform was falsely represented as a licensed and legitimate venue for crypto trading. However, according to the SEC, no actual trading took place on these platforms. (The Block)
4. Fabricated Security Token Offerings
In some cases, investors were also presented with “Security Token Offerings” (STOs) allegedly issued by credible, legitimate companies. These too were fabricated, with no real issuers or market mechanisms behind them. (Crypto Briefing)
5. Withdrawal Obstacles and Advance Fee Demands
Investors who attempted to withdraw their funds were met with further barriers, including demands for upfront fees. As the SEC complaint explains, these tactics served to prolong the investment illusion while extracting more capital from victims. (SEC)
The result was that investors’ money essentially disappeared into a web of domestic bank accounts and crypto wallets, including transfers overseas in ways that masked the money trail. (SEC)
The SEC’s Legal Allegations and Charges
According to the official SEC press release, the defendants were charged under the anti-fraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. The regulatory authority alleges these entities violated core investor protection laws by making material misrepresentations about trading operations, licensing, and the legitimacy of investment products. (SEC)
The Commission is seeking a range of legal remedies that may include:
- Permanent injunctions to prevent further fraudulent activity.
- Civil penalties for regulatory violations.
- Disgorgement with prejudgment interest, which would require return of ill-gotten gains. (SEC)
At the time of this writing, the case is proceeding in the U.S. District Court for the District of Colorado, and a trial is anticipated as part of the SEC’s effort to hold the defendants accountable.
Why This Enforcement Action Holds Significant Weight
There are multiple reasons this SEC action is noteworthy:
1. Increased Use of AI Narratives in Fraud
The SEC specifically cited the use of so-called AI-generated investment tips as a tactic used to build trust and entice investors. This use of AI labeling illustrates a new twist fraudsters are taking, blending emerging technologies with older confidence schemes. (CoinCentral)
2. Reliance on Social Platforms and Messaging Apps
By operating in spaces where regulation and oversight are minimal, fraudsters can cultivate trust and execute their schemes more effectively. The use of WhatsApp group chats and social media ads underscores how digital platforms can be co-opted for illicit financial activities. (SEC)
3. Risks to Retail Investors
Retail investors — often less experienced and more vulnerable to persuasive narratives — are particularly at risk in scenarios like this. The SEC continues to emphasise the importance of vetting investment opportunities and avoiding reliance on unverified group chats or community signals. For investor education, the SEC’s own Investor.gov website offers tools for checking registration and background of investment service providers (External Link). (SEC)
Moreover, this action illustrates that while the broader regulatory emphasis on crypto enforcement has evolved in the past year, the Commission remains vigilant in pursuing clear cases of fraud. Reports indicate that even in 2025, there have been shifts and uncertainties in enforcement approaches, but fraud cases remain a key focus. (Bitget)
Red Flags That Potential Investors Should Recognize
The SEC’s allegations in this case involve multiple warning signs that are common in investment fraud:
Overemphasis on AI or Technology Buzzwords
Entities promising guaranteed profits or sophisticated trading results because of AI should be treated with scepticism.
Unverified Platforms and Claims of Licensing
Legitimate exchanges and trading venues are usually registered with appropriate regulators and have verifiable track records.
Pressure to Move Communication Off Public Platforms
Shifting investors into private group chats is a common tactic used to limit transparency and oversight.
Advance Fee Requirements for Withdrawals
Requiring payments before enabling access to funds is a classic hallmark of fraudulent schemes.
Recognising these red flags — and cross-checking opportunities with regulatory resources — can help investors protect themselves.
Broader Industry Context: Crypto Fraud Trends
While this case is distinct and serious, it fits within broader trends where fraudsters exploit hype around emerging technologies and digital assets:
Exponential Growth in Scam Activity
Studies and industry reports continue to show that crypto scams, particularly those involving AI narratives, have increased significantly. Scammers are continually innovating, and fraud mechanisms adapt to new tech trends. Many of these schemes are referred to as “confidence scams,” where trust is artificially built before exploitation. (archive.vn)
Regulatory Focus on Enforcement and Investor Protection
Agencies like the SEC are actively pursuing fraud cases to safeguard retail investors. While wider regulatory approaches may evolve, enforcement actions remain potent tools for deterring misconduct.
Comparison to Other Notorious Crypto Frauds
Historical examples such as OneCoin — a fraudulent crypto scheme that raised billions — show that crypto scams can escalate to massive scales. OneCoin’s operators were ultimately prosecuted for widespread fraud, illustrating the serious legal consequences of such schemes. (For a related historical case, see OneCoin on Wikipedia.) (Wikipedia)
Investors and market participants should use such historical context to better understand the scale and risk profile of fraudulent operations.
How Investors Can Protect Themselves
Given the prevalence of online scams and the sophistication of fraudulent narratives, investors should adopt disciplined practices:
Verify Licenses and Registrations
Always check whether a platform or adviser is registered with appropriate financial authorities or exchanges.
Avoid Private Chat-Only Investment Advice
Investment decisions should be based on verifiable research and not solely on recommendations from private groups without accountability.
Consult Regulatory Resources
Tools such as the SEC’s Investor.gov and reputable financial news outlets offer critical information and warnings about fraud trends.
Use Trusted Exchanges and Custodians
Rather than unknown platforms, using well-established exchanges with transparent histories reduces exposure to fraudulent activity.
By taking measured steps, investors can significantly decrease the likelihood of falling prey to schemes similar to the one alleged in this SEC complaint.
Closing Reflections on Enforcement and Market Integrity
The SEC’s charges against three crypto platforms and four related investment clubs over a $14 million AI-themed fraud underscore several enduring truths about financial markets:
- Fraudsters continuously innovate, especially where emerging technologies create hype.
- Regulatory vigilance and enforcement are essential to uphold investor protection.
- Retail participants must remain alert and methodical in their due diligence.
For further reading on SEC enforcement in the crypto space and related updates, you can track developments directly through the SEC press release archive (External Link).
As digital asset markets continue to evolve, cases like this demonstrate that regulatory frameworks and investor education must adapt in tandem.
Sources;
Primary Regulatory Source:
- SEC press release on charges: https://www.sec.gov/newsroom/press-releases/2025-144-sec-charges-three-purported-crypto-asset-trading-platforms-four-investment-clubs-scheme-targeted (SEC)
Additional Reporting and Analysis:
- The Block summary of SEC charges: https://www.theblock.co/post/383702/us-sec-charges-14-million-crypto-scam (The Block)
- CryptoBriefing overview: https://cryptobriefing.com/sec-charges-crypto-trading-platforms-investment-clubs-14-million-scam/ (Crypto Briefing)
- ChainCatcher coverage on combined tactics: https://www.chaincatcher.com/en/article/2232181 (ChainCatcher)
- OneCoin historical context: https://en.wikipedia.org/wiki/OneCoin (Wikipedia)
