In a decisive move against digital asset fraud, a New York federal court has finalized a $5.5 million default judgment against NanoBit Limited and its associated defendants. The ruling, announced by the U.S. Securities and Exchange Commission (SEC), concludes a civil enforcement action targeting a highly structured relationship-investment scheme, commonly known as a “pig-butchering” scam.
Anatomy of the NanoBit Fraud
According to the SEC’s complaint, the fraudulent operation ran from September 2023 to June 2024. The perpetrators utilized WhatsApp groups to impersonate seasoned financial industry professionals. By providing unsolicited market tips and building personal rapport with users, they slowly established trust before introducing them to the NanoBit platform, a supposedly high-yielding cryptocurrency trading broker.
Once users registered and deposited funds, the platform displayed simulated dashboards showing highly profitable trades. However, the SEC revealed that NanoBit never executed any actual cryptocurrency trades. Instead, the victim’s deposits—comprising both fiat and digital currencies—were immediately diverted to offshore bank accounts in Hong Kong. In total, the scheme participants funneled over $2 million offshore and misappropriated hundreds of thousands of dollars in crypto assets, leaving at least 18 retail investors with losses totaling nearly $1 million.
Court Verdict and Financial Penalties
The U.S. District Court for the Eastern District of New York ordered a combined payment of $5,518,902 in disgorgement, civil penalties, and prejudgment interest. 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 issued a default judgment, ruling their non-appearance as willful.
The financial breakdown of the judgment includes:
- NanoBit Limited: Over $532,000 in disgorgement, approximately $82,000 in prejudgment interest, and a $1.1 million civil penalty.
- Corporate Defendants: Radiant Horizons, Sweet Karma Fashion, and Zhao Tropical Deli must each pay $1.1 million in civil penalties.
- Individual Defendants: Jiajie Liu was ordered to pay a $120,000 penalty, while Hua Zhao faces a $55,000 penalty.
Additionally, the court has permanently barred all six defendants from participating in future securities offerings or transactions, though the individuals retain the right to trade within their personal accounts.
Rising SEC Crackdown on Relationship Scams
This lawsuit, first filed in September 2024, represents one of the SEC’s initial major enforcement actions targeting relationship-based crypto investment scams. The regulator filed a parallel action against another fraudulent platform, CoinW6, indicating a systemic effort to dismantle these coordinated syndicates. By fabricating claims of SEC registration through fake entities like “NanobitUS Securities,” these platforms exploit the credibility of regulatory frameworks to deceive investors.
Frequently Asked Questions
What is a “pig-butchering” relationship-investment scam?
A relationship-investment scam, or “pig-butchering” scam, is a financial fraud where attackers build trust with victims over weeks or months, often via messaging apps like WhatsApp. Once trust is established, the victim is coerced into investing in a fake trading platform that displays artificial profits but prevents withdrawals.
How did NanoBit deceive its investors?
NanoBit used fake trading dashboards that simulated profitable transactions, falsely claimed an affiliation with an SEC-registered entity called NanobitUS Securities, and routed actual user deposits directly to offshore accounts in Hong Kong instead of executing trades.
What are the consequences of the SEC’s default judgment?
The court ordered $5.5 million in total fines, disgorgement, and penalties. It also issued permanent bans against the defendants, preventing them from participating in any future securities transactions or public offerings.
