SEC Orders $5.5 Million Payment from NanoBit for Fraudulent Crypto Scheme

A federal judge in New York imposed a $5.5 million default judgment against NanoBit Limited and five co-defendants for executing a fraudulent scheme involving a fake crypto trading platform. The U.S. District Court for the Eastern District of New York announced this decision on June 16, which requires a total payment of $5,518,902, including disgorgement, prejudgment interest, and civil penalties.

The U.S. Securities and Exchange Commission (SEC) alleges that from September 2023 to June 2024, participants in the scheme posed as professionals in the financial sector, establishing trust within WhatsApp groups. They directed 18 investors to deposit their funds into the NanoBit platform. Despite what appeared to be successful trades on user dashboards, no actual transactions occurred, with investor funds diverted to bank accounts in Hong Kong.

Reports indicate that the scheme resulted in losses close to $1 million in both crypto and fiat currency for the affected investors. The SEC found that over $2 million was wired offshore, and hundreds of thousands of dollars in crypto assets were misappropriated. Additionally, NanoBit falsely claimed to be affiliated with an SEC-registered entity, NanobitUS Securities.

The defendants include several entities—Radiant Horizons Limited, Sweet Karma Fashion Inc., Zhao Tropical Deli Inc.—and individuals Jiajie Liu and Hua Zhao. None of the defendants appeared in court, leading the judge to rule their default as willful without any valid defense presented. NanoBit Limited is set to pay over $532,000 in disgorgement, nearly $82,000 in prejudgment interest, and a civil penalty of $1.1 million. Each of the other corporate entities is liable for $1.1 million as well. Liu and Zhao face individual penalties of $120,000 and $55,000, respectively, all payable within 30 days.

The court's ruling permanently bars all defendants from violating federal anti-fraud provisions in the securities domain or from engaging in securities offerings. Notably, Liu and Zhao retain the ability to trade personal accounts. This case marks a significant action by the SEC against "relationship-investment scams" associated with fraudulent crypto platforms, following similar enforcement initiatives against other alleged scams like CoinW6.