In a decisive move to clean up the digital asset ecosystem, a federal judge in the U.S. District Court for the Eastern District of New York has handed down a massive $5.5 million default judgment against NanoBit Limited and five affiliated defendants. The ruling, announced by the U.S. Securities and Exchange Commission (SEC) on June 16, serves as a stark warning to bad actors exploiting the burgeoning cryptocurrency market through elaborate relationship-investment schemes.
The Anatomy of the NanoBit Fraud
According to the SEC’s complaint, the fraudulent operation spanned from September 2023 to June 2024. The perpetrators executed what is colloquially known in the financial industry as a “pig butchering” scam. By posing as seasoned financial professionals within WhatsApp groups, the defendants methodically built trust and rapport with unsuspecting retail investors. Once confidence was established, these malicious actors persuaded victims to deposit fiat currency and digital assets into NanoBit, an ostensibly legitimate trading platform.
To maintain the illusion of a thriving investment portfolio, NanoBit provided users with fabricated dashboards displaying highly profitable—but entirely fictitious—crypto transactions. The SEC revealed that the platform never executed a single actual trade. Instead, the deposited funds were systematically misappropriated. The agency detailed how investor capital bypassed the market entirely, being funneled directly into offshore bank accounts based in Hong Kong. In total, participants wired more than $2 million offshore, while at least 18 victims collectively lost nearly $1 million.
Breakdown of the $5.5 Million Penalty
Because the defendants—including NanoBit Limited, Radiant Horizons Limited, Sweet Karma Fashion Inc., Zhao Tropical Deli Inc., Jiajie Liu, and Hua Zhao—failed to appear in court, the judge ruled the default as willful. The court consequently ordered a combined $5,518,902 in disgorgement, prejudgment interest, and civil penalties.
- NanoBit Limited: Assessed the largest individual burden, comprising over $532,000 in disgorgement, approximately $82,000 in prejudgment interest, and a hefty $1.1 million civil penalty.
- Corporate Affiliates: Radiant Horizons Limited, Sweet Karma Fashion Inc., and Zhao Tropical Deli Inc. were each slapped with $1.1 million in penalties.
- Individual Operators: Jiajie Liu was ordered to pay $120,000, while Hua Zhao faces a $55,000 penalty.
Furthermore, to prevent future infractions, the court has permanently barred all six defendants from participating in any securities offerings or transactions, though Liu and Zhao are permitted to trade within their personal accounts. The perpetrators have a strict 30-day window to satisfy these financial obligations.
Broader SEC Enforcement Strategy
This default judgment marks a significant milestone in the SEC’s escalating war against fraudulent crypto platforms. NanoBit’s deceit was compounded by its false claims that an affiliate entity, NanobitUS Securities, held official SEC registration and boasted ties to reputable global financial institutions. The original complaint, filed in September 2024, coincided with a parallel regulatory action targeting another fraudulent platform, CoinW6.
By bringing the hammer down on these deceptive networks, the SEC aims to restore market integrity and protect retail participants. The enforcement action underscores the vital importance of rigorous due diligence, highlighting that the promise of outsized returns in the crypto space often masks severe counterparty risks and outright theft.
Frequently Asked Questions (FAQ)
What is a “pig butchering” crypto scam?
A “pig butchering” scam is a type of long-term financial fraud where scammers build a relationship with the victim (often via dating apps or messaging platforms like WhatsApp) to gain their trust. The scammer then convinces the victim to invest money into a fraudulent cryptocurrency platform, “fattening” them up with fake profits before stealing the entire investment (the “slaughter”).
How did the SEC penalize the operators of NanoBit?
The SEC secured a $5.5 million default judgment against NanoBit and its affiliates. The penalties include disgorgement of ill-gotten gains, prejudgment interest, and severe civil penalties, alongside a permanent bar from engaging in future securities offerings.
How can investors protect themselves from fake trading platforms?
Investors should always verify a platform’s regulatory status through official databases like the SEC’s EDGAR system or FINRA’s BrokerCheck. Be highly skeptical of investment advice from unsolicited contacts on messaging apps, and remember that guarantees of high, risk-free returns are a primary indicator of financial fraud.
