The U.S. Securities and Exchange Commission (SEC), led by pro-crypto chair Paul Atkins, has filed a major complaint in Colorado alleging a network of fake crypto exchanges and investment clubs stole about $14 million from investors. What the SEC says happened - Four entities operating as “investment clubs” — AI Investment Education, AI Wealth, Lane Wealth, and Zenith Asset Tech Foundation — allegedly recruited victims through social channels and WhatsApp group chats. The clubs purported to be run by experienced financial professionals and promised valuable, AI-generated investment tips. - Investors were pressured to put money into three purported crypto trading platforms — Morocoin Tech, Berge Blockchain Technology, and Cirkor — which were marketed as offering “security token offerings” and compared to legitimate IPOs. The SEC says those platforms were fake and never executed the trades promised. - The complaint calls the operation “an elaborate confidence scam,” alleging that investor funds were misappropriated from day one rather than being invested as represented. Victims who tried to withdraw funds were told to pay upfront “fees,” but no withdrawals were honored. - The complaint also notes that one of the clubs, AI Investment Education, was registered with the SEC as an investment adviser, yet the phone number on file is disconnected and the firm reported no assets under management. - According to the SEC, the roughly $14 million was moved overseas through a complex pattern of bank accounts and crypto wallets. SEC comments and wider implications Laura D’Allaird, chief of the SEC’s Cyber and Emerging Technologies Unit, described the case as an example of a common confidence scheme: “Our complaint alleges a multistep fraud that attracted victims through social media advertisements, built trust in group chats where fraudsters posed as financial professionals, and ultimately led victims to invest their money into nonexistent crypto asset trading platforms where it was misappropriated.” She warned of the “devastating consequences” these schemes can have on investors. Why this matters for crypto users The SEC’s action highlights two persistent risks in the crypto space: the use of social and messaging apps to build trust and recruit victims, and the appearance of legitimacy through buzzwords like “AI” and “security token offerings.” The complaint also underscores how quickly funds can be moved across borders using a mix of fiat and crypto channels. The SEC’s complaint now sets the stage for further legal action as regulators seek to recover funds and bring those responsible to account. Featured image credit: DALL·E; chart: TradingView.com. Read more AI-generated news on: undefined/news

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