SEC Files Lawsuit Against Cryptocurrency Fraud Scheme
The U.S. Securities and Exchange Commission (SEC) has initiated a comprehensive civil lawsuit against several companies and online “investment clubs” accused of orchestrating a sophisticated cryptocurrency fraud scheme. Filed on December 22, 2025, in the District Court for Colorado, the lawsuit identifies seven parties implicated in what the SEC refers to as a typical “investment confidence” scam.
Details of the Fraud
According to the regulatory body, the perpetrators managed to defraud retail investors of at least $14 million through a series of deceptive practices, including the creation of fictitious trading platforms and false profit reports, coupled with aggressive marketing strategies intended to entice victims.
This case is part of a troubling trend in the cryptocurrency realm, where scams have increasingly utilized social media, encrypted messaging tools, and misleading assertions of regulatory endorsement. The SEC’s investigation revealed that the fraudulent operation began with online advertisements and social media campaigns designed to attract potential investors into private WhatsApp groups.
Inside these groups, scammers masqueraded as seasoned traders and financial experts, promoting cryptocurrency investment strategies touted as being powered by artificial intelligence and presenting little risk.
Fraudulent Trading Platforms
The misleading tactics escalated as participants were urged to create accounts on three fraudulent trading sites: Morocoin Tech Corp., Berge Blockchain Technology Co., Ltd., and Cirkor Inc.. The SEC contends that these platforms falsely claimed to be registered or licensed by U.S. authorities to instill confidence in prospective investors.
Investors, upon depositing their money, were greeted with fabricated dashboards that displayed counterfeit profits intended to foster trust and prompt further investment. After initial seemingly successful experiences, the allegations indicate that the defendants encouraged victims to participate in bogus “security token offerings” related to non-existent businesses, with promotional materials boasting exorbitant returns and purported exclusive opportunities.
Withdrawal Issues and Fund Misappropriation
When victims tried to withdraw their investments, they supposedly faced unexpected fees and taxes, while operators threatened to freeze accounts or erase all funds unless additional payments were submitted. Furthermore, investigators revealed that a significant portion of the funds was rapidly channeled overseas through a network of bank accounts and cryptocurrency wallets, making it nearly impossible for victims to recover their losses once they ceased further payments.
SEC’s Response and Investor Protection
In light of these findings, the SEC is pursuing permanent injunctions, civil fines, and the reimbursement of ill-gotten gains, along with accrued interest. This lawsuit highlights the SEC’s ongoing commitment to protecting retail investors in the cryptocurrency market. The commission has previously issued warnings about scams that exploit messaging applications, fake trading interfaces, and fraudulent regulatory admissions.
It emphasizes the importance for investors to verify registration claims and remain vigilant against unsolicited investment propositions in the crypto space.
