How Fake Crypto Platforms and Investment Clubs Operated

According to the SEC’s complaint, the fraud scheme gradually took shape between January 2024 and January 2025. The perpetrators launched the process through advertisements posted on popular social media platforms. These ads promoted easy profits, low risk, and AI-powered trading strategies.

They directly invited interested users into investment groups created on WhatsApp. At this stage, the scammers introduced themselves as experienced financial experts. Alleged AI-based trading tips shared in group chats reinforced investor confidence. Over time, the structure created the perception of a closed and “exclusive” investment club.

No Real Trades, No Real Companies

After gaining trust, investors were guided to open accounts on supposed crypto platforms operating under the names Morocoin Tech Corp., Berge Blockchain Technology Co. Ltd., and Cirkor Inc. The scammers claimed these platforms were government-licensed and legally regulated. The SEC states that these claims were entirely false.

According to the complaint, no real trading activity ever occurred on these platforms. The products offered under the label of “Security Token Offering” had no real backing. The SEC revealed that the companies allegedly issuing these tokens did not exist in reality. Demanding additional fees from investors seeking withdrawals marked the final stage of the scheme.

AI-Driven Fraud Tactics

Alongside AI-generated investment advice, the use of deepfake videos increased rapidly. Scammers relied on artificial intelligence to create realistic videos showing well-known figures such as Elon Musk seemingly endorsing fake investment schemes.

The same actors used AI-based tools to bypass KYC checks, impersonate customer support interactions, and replicate trading dashboards to appear legitimate. In some cases, scammers expanded their attack surface by exploiting Zoom meetings through fake invitations containing malware.

Why It Matters: Behavioral Breakdown and Market Risk

This case demonstrates that crypto fraud has become not only a technical threat but also a behavioral one. AI narratives, social proof, and closed-group dynamics weaken investors’ critical judgment. Such schemes tend to spread faster during periods of regulatory uncertainty.

The SEC’s action signals that regulators may target not only fake platforms but also entities operating under labels such as “investment education” or “AI-powered clubs.” This development increases regulatory risk for similar models across the crypto ecosystem.

Regulatory Action and Legal Claims

The SEC filed the lawsuit in the U.S. District Court for the District of Colorado. The agency alleges that the defendants violated the anti-fraud provisions of the Securities Act and the Exchange Act. The SEC seeks permanent injunctions, civil penalties, and the return of ill-gotten gains with interest.

The SEC’s investor education unit also issued a separate warning urging caution toward investment offers circulating on social media and messaging apps. As the case progresses, the SEC will closely monitor whether to expand oversight of AI-themed investment clubs and similar crypto platforms, keeping broader enforcement options on the table.

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CLS Global Caught in FBI’s NexFundAI Trap

The FBI launched a fake token, NexFundAI, as part of an undercover investigation in May 2024. CLS Global, along with Hong Kong-linked ZM Quant Investment and Russia-linked Gotbit Consulting, agreed to provide fraudulent market-making services, manipulating token volume to deceive investors.

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The SEC filed fraud charges in October 2024 against CLS Global and its employee Andrey Zhorzhes.

What Is Wash Trading?

Wash trading involves artificially inflating trading volume by repeatedly buying and selling the same asset. This gives a false impression of demand.

A report from Chainalysis in January 2025 estimated at least $2.6B in wash traded volumes — about 2% of total daily crypto market volume.

However, the US National Bureau of Economic Research suggested in 2022 that up to 70% of activity on unregulated exchanges could be wash trading.

Who Is CLS Global?

Founded in 2017, CLS Global was created to fill the demand for “high-quality market-making solutions.” CEO Filipp Veselov, formerly of Latoken, leads the firm. Their CRO, Pavel Singaevskii, was previously with Stex, which allegedly shut down unexpectedly in 2023.

Despite the charges, CLS Global still operates and maintains over 110,000 followers on X.

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Additionally, one of the senior lawyers from the team has been removed from the SEC’s enforcement division. According to sources, some employees view this move as an unfair demotion. An SEC spokesperson declined to comment on the matter.

Is a Softer Approach to Crypto Coming?

This development comes just after SEC Commissioner Hester Peirce outlined a new regulatory approach to the crypto markets. Peirce stated that the SEC had previously taken an overly aggressive stance on crypto enforcement and suggested that “retroactive relief” might be provided for certain token sales.

Last year, the SEC filed 33 crypto-related enforcement actions, targeting 90 defendants and respondents.

Are SEC Policies Changing Under the Trump Administration?

These recent changes are part of a broader leadership shake-up that has accelerated since U.S. President Donald Trump took office on January 20.

In October 2024, the SEC’s chief enforcement officer, Gurbir Grewal, stepped down. His replacement, Sanjay Wadhwa, left the agency just months later on January 31.

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Meanwhile, former SEC Chair Gary Gensler resigned on January 20. These shifts have fueled speculation that the SEC may adopt a more lenient stance on crypto regulation.

What’s Next for SEC’s Crypto Policy?

The SEC’s latest moves have sparked significant debate in the crypto space. With expectations rising for a less aggressive regulatory approach, investors are closely watching how the agency will shape its future policies.

Uncertainty continues in the crypto world, and the SEC’s next steps remain highly anticipated.

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