AI used to defraud investors of millions, WA regulators say

State regulators allege that a network of fake trading platforms, some in Washington, defrauded people out of nearly $10 million through a series of cryptocurrency scams.

The 38 companies sold fake securities token offerings when not registered to sell investments, according to the charges filed by the Washington State Department of Financial Institutions Division of Securities on Wednesday.

The platforms allegedly defrauded investors through elaborate crypto scams that used fake education foundations and AI-generated investment trading signals. Three Washington residents invested about $49,000 collectively.

The state ordered the 38 platforms to cease and desist. Six of the platforms - Cirkor, Novabit, EtherGalaxy, Lencoin, Opacoin and Malcoin - are Washington corporations.

The scams began with advertisements for free investment trainings on social media, before asking investors to place test trades" on their platforms, according to the charges. Those platforms turned out to be fraudulent, and once investors made a few successful trades, the platforms allegedly convinced them to invest personal funds.

The platforms allegedly further defrauded them by stating they could withdraw investment gains after paying previously undisclosed fees. "In desperation, many investors paid this advance fee, but none received any of their investment funds back, the charges state.

Zenith and Cirkor were responsible for defrauding the majority of investors out of $7.4 million between January 2024 and June 2025, the charges state. One investor reported $600 of successful withdrawals. No other investor contacted by the state has withdrawn any of their investment or alleged profit, the charges state.

Many of the platforms were not registered as securities salespersons or broker-dealers in Washington, the charges state. The companies have been fined various dollar amounts in the tens of thousands.

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