The U.S. Securities and Exchange Commission has secured a landmark default judgment in its case against NanoBit Limited and several linked defendants, marking the SEC's first courtroom win over crypto relationship-investment scams. According to the SEC litigation release, the U.S. District Court for the Eastern District of New York entered the judgment on June 16, nearly two years after the agency filed its complaint. The court ordered NanoBit, Radiant Horizons Limited, Sweet Karma Fashion Inc., *Zhao Tropical Deli Inc.**, Jiajie Liu and Hua Zhao to pay penalties, disgorgement and interest. The final judgment lists total payment obligations of about $5.52 million across the defendants, with the scheme running from September 2023 to June 2024. As reported by Judge Sanket J. Bulsara, the defendants' default was willful, with no meritorious defense presented and no alternative to obtain the relief sought.
The case centered on claims that NanoBit operated as a fake crypto trading platform that never processed any real trades - instead, withdrawals were blocked the moment victims tried to cash out their supposed profits. According to the SEC, at least 18 investors lost nearly $1 million in crypto and fiat currency through the scheme. The defendants and other scheme participants used social media apps to reach investors before moving them into WhatsApp groups. In its September 2024 complaint, the agency said the participants posed as financial industry professionals and built trust with investors. The SEC alleged that NanoBit falsely claimed an affiliate, NanobitUS Securities, was registered with the regulator. Court filings describe a scheme that leaned on human trust rather than any real trading technology, with the defendants using fake cryptocurrency initial coin offerings to gain victims' trust and lure them into investing. Investor funds weren't used to trade, but rather went to bank accounts in Hong Kong, with participants wiring more than $2 million offshore and misappropriating hundreds of thousands of dollars in investors' crypto assets.
The court ordered specific financial penalties across all defendants, with NanoBit alone responsible for approximately $1.79 million in disgorgement, interest and civil fines. Three connected entities - Radiant Horizons, Sweet Karma and Zhao Tropical Deli - each drew civil penalties above $1.18 million for their participation in the scheme. Individual defendants Jiajie Liu and Hua Zhao face penalties of $120,000 and $55,000 respectively. The court permanently barred all six defendants from selling securities and ordered the two individual defendants to pay $50,000 penalties on top of their returned profits. This represents the first U.S. action aimed squarely at relationship investment fraud, often labeled as 'pig butchering' schemes that cultivate personal bonds before steering targets into polished platforms that flash fabricated profits.
The NanoBit judgment comes as U.S. regulators continue to combat relationship investment fraud that increasingly targets crypto buyers. As reported by the SEC's investor education office, the ruling serves as a warning about relationship scams that increasingly target crypto buyers, urging people to rely on official records rather than chat-group tips when weighing investment offers. The agency notes that anyone can check sellers through the Investor.gov database before moving funds. This case follows other recent enforcement actions, including the SEC's May charge against Texas resident Nathan Fuller over an alleged $12.3 million AI crypto arbitrage scheme. Regulators warn that such frauds have multiplied as crypto adoption widened and scammers refined their scripts, with cases frequently occurring beyond recovery reach across borders.
