Financial fraud and scams on social media have been rampant globally, and now the Securities and Exchange Commission (SEC) has taken its first action against such illegal activities. The regulator has announced it charged five entities and three individuals in connection with two relationship investment scams involving fake crypto asset trading platforms, NanoBit and CoinW6, respectively.

SEC Busts Pig Butchering Scams

According to the US regulator, the two companies solicited investors, gained their trust by lying, and then stole their money. Such scams are rampant and often referred to as “pig butchering.”

“Relationship investment scams, including those involving crypto-asset investments, pose a risk of catastrophic harm to retail investors, and the threat is increasing rapidly as these scams become more popular with fraudsters,” said Gurbir Grewal, Director of the SEC’s Division of Enforcement.

In its complaint against NanoBit, the regulator revealed that from about October 2023 until June 2024, the defendants impersonated financial industry professionals in WhatsApp groups to build investors’ trust. Then, they solicited their investment through NanoBit, which they falsely promoted as an affiliate to a regulated platform.

Furthermore, the alleged perpetrators even promoted a “fake” initial coin offering, promising substantial returns. However, the regulator alleged that the NanoBit platform was fake and accepted $2 million from investors, which was transferred to bank accounts in Hong Kong. The allegations also include the misappropriation of hundreds of thousands of dollars worth of investors’ crypto assets.