SEC Charges Crypto Firms in $14 Million AI-Powered Scam Targeting Retail Investors

By Staff Reporter | December 24, 2025

The U.S. Securities and Exchange Commission (SEC) has filed charges against several cryptocurrency firms and investment clubs accused of orchestrating a sophisticated scam that defrauded retail investors of more than $14 million. The scheme allegedly used fake AI-generated investment tips and social media lures to build false confidence before siphoning funds through bogus trading platforms.

Multi-Step Fraud Unraveled

According to the SEC complaint, the defendants operated under the guise of legitimate investment entities, enticing victims starting in 2024 with targeted advertisements on social media platforms. These ads directed potential investors to join private WhatsApp groups masquerading as exclusive “investment clubs” staffed by supposed financial professionals.[1][2]

Once inside these groups, fraudsters posed as experts offering trade recommendations purportedly powered by artificial intelligence. The tips were designed to appear highly accurate, fostering trust and encouraging participants to deposit funds into three unregistered cryptocurrency trading platforms: Morocoin Tech Corp., Berge Blockchain Technology Co., Ltd., and Cirkor Inc. The investment clubs involved include AI Wealth Inc., Lane Wealth Inc., AI Investment Education Foundation (AIIEF) Ltd., and Zenith Asset Tech Foundation.[1][2][3]

“This matter highlights an all-too-common form of investment scam that is being used to target U.S. retail investors with devastating consequences,” stated Laura D’Allaird, Chief of the SEC’s Cyber and Emerging Technologies Unit. “Fraud is fraud, and we will vigorously pursue securities fraud that harms retail investors.”[1]

Funds Laundered Overseas

The scam netted at least $14 million, with $7.4 million in cryptocurrency assets and $6.6 million in fiat currency. After victims transferred funds to unhosted wallets on the fake platforms, the scammers quickly moved the proceeds across blockchains and intermediaries. Some transactions routed through accounts held by individuals in China or Burma located in Southeast Asia, while fiat funds flowed through at least 27 domestic U.S. bank accounts before being wired overseas.[1][2]

Investigators traced connections to operators based in China, Malaysia, and Hong Kong, though the heads of the platforms and clubs were not named in the filings and could not be reached for comment.[2]

Legal Violations and Remedies Sought

The SEC alleges violations of the anti-fraud provisions under the Securities Act of 1933 and the Securities Exchange Act of 1934. None of the entities were registered with the commission. The agency is pursuing permanent injunctions, disgorgement of ill-gotten gains, civil penalties, and repayment of misappropriated funds plus prejudgment interest. A jury trial has also been requested.[1][2][3]

“Our complaint alleges a multi-step fraud that attracted victims with ads on social media, built victims’ trust in group chats where fraudsters posed as financial professionals and promised profits from AI-generated investment tips, then convinced victims to put their money into fake crypto asset trading platforms where it was misappropriated.”
— Laura D’Allaird, SEC Cyber and Emerging Technologies Unit Chief[2]

Rising Tide of AI-Enhanced Crypto Scams

This case underscores a growing trend where scammers leverage emerging technologies like AI to lend credibility to fraudulent schemes. Retail investors, often drawn in by promises of quick riches in the volatile crypto market, have become prime targets. The use of messaging apps like WhatsApp for private group interactions allows fraudsters to evade easy detection while building personal rapport with victims.[1][2]

Breakdown of Misappropriated Funds

Asset Type	Amount
Cryptocurrency	$7.4 million
Fiat Currency	$6.6 million
Total	$14 million

Investor Warnings and Regulatory Push

The SEC’s action serves as a stark reminder for investors to verify the registration status of platforms and advisors before committing funds. Unregistered entities promising guaranteed returns, especially those relying on unproven AI strategies, warrant extreme caution. As cryptocurrency adoption grows, regulators are intensifying efforts to combat such schemes, with this enforcement action signaling zero tolerance for fraud cloaked in tech innovation.[1]

Neither the defendants nor their representatives have publicly responded to the allegations as of this report. The case is ongoing, with potential implications for how crypto platforms and AI-driven investment advice are scrutinized moving forward.

This article is based on official SEC filings and related reports. Developments in the case will be updated as they occur.