The NanoBit crypto fraud judgment, entered by the U.S. District Court for the Eastern District of New York on 16 June, orders six defendants to pay a combined $5,518,902 in disgorgement, prejudgment interest, and civil penalties.
The Securities and Exchange Commission (SEC) filed its original complaint in September 2024. Nearly two years later, the court entered a final default judgment after the defendants failed to appear or oppose the action.
Inside the NanoBit Crypto Fraud Judgment
According to the SEC’s original complaint, the scheme ran from September 2023 to June 2024. At least 18 investors lost nearly $1 million in crypto and fiat currency combined, per figures reported by CoinDesk.
The six defendants named in the judgment are NanoBit Limited, Radiant Horizons Limited, Sweet Karma Fashion Inc., Zhao Tropical Deli Inc., Jiajie Liu, and Hua Zhao. A seventh defendant named in the original complaint, Fei Liao, is not included in the 16 June order.
The three shell companies, Radiant Horizons, Sweet Karma Fashion, and Zhao Tropical Deli, were each fined approximately $1.2 million, according to ForkLog. The judgment also permanently enjoins all defendants from violating Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Individuals Liu and Zhao are barred from participating in any securities offering, with a narrow exception for transactions in their own personal accounts.
WhatsApp, LinkedIn, and the Pig-Butchering Playbook
The NanoBit case was the SEC’s first enforcement action targeting relationship investment scams in the crypto space, as Cryptopolitan reported. The structure fits the pig-butchering template: operators built trust via social media before herding targets into WhatsApp groups, where they posed as financial professionals and pitched a fabricated trading platform.
The SEC alleged that NanoBit falsely claimed an affiliate, NanobitUS Securities, was registered with the regulator. Victims saw platform screens displaying crypto prices, account balances, and trading activity. ‘No transactions took place on the NanoBit platform,’ the SEC said, with investors’ funds going directly to scheme participants. More than $2 million was wired to bank accounts in Hong Kong; additional crypto assets were misappropriated.
The same day it filed the NanoBit complaint, the SEC simultaneously charged a separate fake platform, CoinW6, in the U.S. District Court for the Central District of California. According to the SEC’s press release on both actions, operators across both cases used WhatsApp, LinkedIn, and Instagram to recruit victims. When investors attempted to withdraw purported profits, schemers demanded additional payments for taxes or fees, claimed assets had been frozen by law enforcement, or threatened victims with compromising communications obtained during the relationship-building phase.
The SEC’s investor alert on group-chat scams, published via Investor.gov, warns that fraudsters may falsely tell targets that the SEC or another government agency has frozen their account and direct them to pay money to unfreeze it. The alert also cautions investors against setting up accounts on fraudulent websites or mobile apps on a counterparty’s instruction.
The default judgment was entered precisely because none of the six defendants appeared. That outcome carries a structural irony: the platforms these schemes construct are elaborate enough to fool victims into wiring funds internationally, yet when a federal court schedules a hearing, the operators are nowhere to be found.
With disgorgement clawback dependent on locating assets, the practical recovery rate for those 18 investors will hinge on whether the SEC can trace and freeze the Hong Kong-bound wire transfers and any remaining crypto holdings. That enforcement step, not the judgment itself, is where the money either comes back or doesn’t.
