The Securities and Exchange Commission (SEC) has charged multiple entities with profiting from relationship-focused investment scams.
Today (September 18), the governmental regulator took action on five entities and three individuals in connection with fraudulent behavior. According to the report, the scams were linked to crypto platforms NanoBit and CoinW6.
“In these two cases, we allege that fraudsters created fake crypto ecosystems that displayed false information to investors. Our allegations serve as a reminder to the public to be on heightened alert about potential scams involving investment opportunities promoted by strangers on social media,” said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement.
Relationship scammers charged
Companies NanoBit Limited, Radiant Horizons Limited, Sweet Karma Fashion Inc., Zhao Tropical Deli Inc. were charged alongside individuals Jiajie Liu, Fei Liao, and Hua Zhao.
They are all accused of violating the antifraud provisions of federal securities laws. The SEC seeks “permanent injunctions, disgorgement with prejudgment interest, and civil penalties against each defendant.”
The SEC’s Office of Investor Education and Advocacy and the CFTC’s Office of Customer Education and Outreach, FINRA, and NASAA has warned people of the impact of fraudulent communications. These individuals seek to build trust with their targets and then siphon money through a network of falsified information and requests for transfers.
“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,” concluded Director Grewal.
In related crypto news, NovaTech Ltd. was charged for its role in a corrupt money-generating plan that raised $650 million in crypto assets from more than 200,000 investors worldwide.
The SEC alleges that between 2019 and 2023, the company owners (Cynthia and Eddy Petion) ran Nova Tech as a crypto asset investment program. They assured investors that their monetary stakes would be placed in the global crypto market.
“NovaTech and the Petions caused untold losses to tens of thousands of victims around the world,” said Eric Werner, Director of the SEC’s Fort Worth Regional Office. “As we allege, MLM schemes of this size require promoters to fuel them, and today’s action demonstrates that we will hold accountable not just the principal architects of these massive schemes, but also promoters who spread their fraud by unlawfully soliciting victims.”
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