Fake signals, frozen accounts: SEC sues crypto AI platform over $12.5M

The SEC says two shell entities ran a WhatsApp-fueled crypto scam that stole millions after impersonating real advisors at major firms.

In a complaint filed September 29 in the Southern District of New York, the Securities and Exchange Commission alleges that Cryptoaiml Ltd. and Cryptoaiml Capital Foundation operated a fake crypto trading platform and "misappropriated" approximately $12.5 million from more than 300 retail investors across the US.

The alleged scheme ran from at least August 2024 to March 2025. At its core, according to the complaint, were WhatsApp group chats where the defendants impersonated real investment professionals at well-known firms - including Raymond James & Associates and Citadel Securities - to win over prospective investors.

The SEC says the defendants posed as the actual president of Citadel Securities in a WhatsApp group called "Citadel AI Community," copying biographical details straight from the real executive's public profile on the Citadel Securities website. An "assistant" in the chat told investors she was from "Miami, USA" and a graduate of Harvard University. In a separate group, the defendants allegedly impersonated an advisor purportedly affiliated with Raymond James.

None of the real professionals or their firms "had any involvement with the Defendants or this scheme, nor did they authorize the use of their names," the complaint states.

The filing says the defendants claimed their AI-generated trading signals had a "98% accuracy rate." VIP members were allegedly told that "Citadel Securities" would "bear up to 90% of your trading risks" and that "if there is any loss, our team will compensate you."

But the platform was a facade. Investors who opened accounts saw dashboards with growing balances and apparent profits. The SEC says "no trading took place on the Cryptoaiml Platform" and "the profits were not real."

To look legitimate, the defendants allegedly filed a Form D - a notice of exempt offering - with the SEC and registered with the Financial Crimes Enforcement Network (FinCEN) as a Money Service Business, all within 14 days of incorporating. The Cryptoaiml website then displayed these filings, telling investors the platform was "a legitimate platform certified by the SEC as well as the MSB."

Both filings were bogus, the SEC alleges. The Form D listed a person named "James Peat" as executive officer, director, and promoter - someone who, according to the complaint, "does not appear to exist." The notarization of his signature "was forged," the filing states. Neither entity did business at the addresses they listed.

The SEC also says the defendants pushed investors to sell securities from brokerage accounts and 401(k)s to fund crypto trades on the platform. The complaint cites specific investors who liquidated employee stock options after being told that crypto trading through the platform would be "more profitable and less risky" than traditional markets.

When investors tried to pull their money out, the complaint alleges, the defendants told them their accounts were "locked" or "frozen" and demanded extra payments to "unlock" them. Investors were directed to wire money to US bank accounts held by third parties - Flavyo Trading Corporation, Neurotech IT Solutions Inc., INTY Endless LLC, and a sole proprietorship called Enjoy Time - which the defendants described as "market makers" or "cooperative suppliers."

The SEC traces the money trail overseas. Crypto assets totaling approximately $11,998,455 moved through four primary wallet addresses before being transferred out of the US, according to the filing. Roughly $513,577 in fiat currency was wired through the third-party accounts to entities in the United Arab Emirates and to US-based accounts held by Chinese companies.

The SEC charges both defendants with securities fraud and investment advisor fraud under federal law - specifically, Section 10(b) of the Exchange Act and Rule 10b-5, plus Sections 206(1) and (2) of the Investment Advisers Act. The agency is asking the court for permanent injunctions, the return of all profits with interest, civil fines, and a ban preventing both entities from ever acting as or working with an investment advisor.

The allegations in this complaint have not been tested, and no court has ruled on the merits.