A federal judge in New York has finalized a $5.5 million default judgment against NanoBit Limited and five co-defendants, concluding a major enforcement action against a fraudulent relationship-investment scheme. The U.S. District Court for the Eastern District of New York ordered a total of $5,518,902 in disgorgement, prejudgment interest, and civil penalties, following an investigation by the U.S. Securities and Exchange Commission (SEC).
The Anatomy of the NanoBit Cryptocurrency Fraud
The SEC complaint detailed a systematic operation running from September 2023 to June 2024. Scheme operators posed as financial industry professionals in WhatsApp communication channels to build trust with retail investors. Once trust was established, victims were coached to deposit capital into the NanoBit platform, which falsely claimed to execute cryptocurrency trades.
Although the platform’s user dashboards displayed simulated profitable trading activity, the SEC revealed that NanoBit never executed any actual transactions. Instead, the platform served as a front to misappropriate user assets. At least 18 investors lost a combined sum of nearly $1 million in fiat and cryptocurrency. Rather than funding market trades, the capital was diverted to bank accounts in Hong Kong, with participants wiring over $2 million offshore.
Regulatory Disclosures and Legal Penalties
To attract capital, NanoBit falsely claimed its affiliate, NanobitUS Securities, was registered with the SEC and associated with reputable financial institutions. The default judgment was issued after the defendants—NanoBit Limited, Radiant Horizons Limited, Sweet Karma Fashion Inc., Zhao Tropical Deli Inc., Jiajie Liu, and Hua Zhao—failed to appear in court.
The financial penalties are structured as follows:
- NanoBit Limited: Owed $532,000 in disgorgement, $82,000 in prejudgment interest, and a $1.1 million civil penalty.
- Entity Defendants: Radiant Horizons Limited, Sweet Karma Fashion Inc., and Zhao Tropical Deli Inc. must each pay a $1.1 million civil penalty.
- Individual Defendants: Jiajie Liu must pay $120,000, and Hua Zhao must pay $55,000.
Additionally, the court has permanently barred all six defendants from participating in future securities transactions or offerings, though the individual defendants retain the right to trade within their personal accounts. A seventh defendant, Fei Liao, was not included in this default judgment.
Financial FAQ
What is a relationship-investment or “pig-butchering” scam?
This scam involves fraudsters building online relationships with victims over weeks or months, often via messaging apps, before directing them to invest in fraudulent cryptocurrency or foreign exchange platforms that show fake returns.
What is a default judgment in financial regulatory cases?
A default judgment is a binding ruling issued by a court of law in favor of the plaintiff (such as the SEC) when the defendants fail to appear in court or fail to submit a legal defense.
Can investors recover funds after an SEC default judgment?
While the court orders disgorgement and penalties, actual recovery depends on the SEC locating and seizing the defendants’ remaining assets, which can be difficult if the funds have been moved offshore.
