SEC charges WhatsApp crypto-AI scheme over $15.3M

The Securities and Exchange Commission filed a complaint charging operators of WhatsApp-based cryptocurrency and artificial intelligence investment schemes that allegedly raised and misappropriated about $15.3 million from investors.

The complaint says promoters recruited investors through invitation-only WhatsApp groups and one-on-one messages, pitching investments tied to crypto and purported AI trading technology. Regulators allege the operators displayed fabricated account statements and staged testimonials to persuade people to transfer cryptocurrency or fiat to wallets and bank accounts controlled by the promoters.

The SEC alleges the defendants offered and sold securities without registration and made material misrepresentations about investment performance and the experience of those running the programs. The complaint seeks disgorgement of ill-gotten gains, civil penalties and an injunction to stop further sales and recover funds for harmed investors.

According to the filing, the scheme used screenshots of trading dashboards and performance charts to create an appearance of legitimacy and encouraged members to recruit friends and family. The SEC alleges claims that proprietary AI tools analyzed markets and executed profitable trades were false or misleading.

The complaint describes transfers of investor funds to a network of crypto wallets and bank accounts controlled by the operators. Regulators say the defendants moved money through multiple accounts and payment processors, a pattern that the SEC says made recovery more difficult. The complaint estimates the total amount raised and diverted at approximately $15.3 million.

The filing charges violations of the antifraud provisions and the registration requirements of federal securities laws. The commission asked the court for disgorgement, civil penalties and an injunction barring the defendants from future securities offerings. Defendants will have the opportunity to respond in court and the SEC must prove its claims.

The SEC noted that encrypted messaging platforms are increasingly used to recruit investors because they enable private communities and direct outreach. In the complaint, regulators said investors were urged to act quickly and to communicate privately with promoters, steps the agency described as reducing transparency and oversight.

The action is one of several recent SEC enforcement efforts involving crypto offerings and allegations of fraud and unregistered sales. The SEC pointed to resources on its website for checking registration status and reporting suspected fraud.