The U.S. Securities and Exchange Commission (SEC) has secured a major legal victory in its ongoing crackdown on relationship-investment schemes, commonly referred to as “pig-butchering” scams. A New York federal judge entered a $5.5 million default judgment against NanoBit Limited and five affiliated defendants, highlighting the regulator’s intensified focus on retail investor fraud within the cryptocurrency sector.
The Mechanics of the NanoBit Scheme
According to the SEC’s complaint, the fraudulent operation ran from September 2023 through June 2024. The scheme relied heavily on social engineering. Fraudsters posed as sophisticated financial-industry professionals in various WhatsApp groups, systematically building trust with retail investors over weeks or months. Once relationship trust was established, the actors guided victims to download the NanoBit application and deposit funds under the guise of active crypto trading.
Although the users’ application dashboards displayed simulated, highly profitable trades, the SEC asserted that the platform never executed any actual transactions on any blockchain or market. Instead, the deposited fiat and digital assets were quickly diverted. The SEC tracked at least 18 defrauded investors who lost nearly $1 million. The scheme coordinators wired over $2 million offshore to Hong Kong bank accounts and misappropriated hundreds of thousands of dollars in digital assets.
Fake Registrations and Corporate Shells
To bolster their credibility, the organizers behind NanoBit falsely claimed that an affiliate, NanobitUS Securities, was formally registered with the SEC. They also claimed associations with renowned, legitimate financial firms. The default judgment targeted a network of corporate shells and individuals, including Radiant Horizons Limited, Sweet Karma Fashion Inc., Zhao Tropical Deli Inc., Jiajie Liu, and Hua Zhao.
Because the defendants failed to appear in court or present a meritorious defense, the U.S. District Court for the Eastern District of New York ruled the default as willful. The final order on June 16 mandated a combined total of $5,518,902 in disgorgement, prejudgment interest, and civil penalties. Specifically, NanoBit Limited is responsible for over $532,000 in disgorgement, approximately $82,000 in prejudgment interest, and a $1.1 million civil penalty. The remaining corporate entities face individual $1.1 million fines, while Jiajie Liu and Hua Zhao were penalized $120,000 and $55,000 respectively.
Regulatory Outlook on Relationship Scams
The NanoBit enforcement action, alongside parallel complaints against similar platforms like CoinW6, represents the SEC’s frontline defense against relationship-based investment fraud. The court has permanently barred all six defendants from future securities transactions or offerings, although the individual defendants retain restricted permission to trade within their personal accounts.
Frequently Asked Questions
What is a relationship-investment or “pig-butchering” scam?
It is a form of financial fraud where scammers contact victims via social media or messaging apps, build a relationship to gain trust, and then convince them to invest in fraudulent cryptocurrency or forex platforms before stealing the funds.
Did NanoBit execute any real cryptocurrency trades?
No. The SEC investigation confirmed that the NanoBit platform was entirely simulated. The trading dashboards showing profits were fabricated, and the actual funds were diverted directly to offshore accounts.
What penalties did the court impose on the NanoBit defendants?
The court ordered a default judgment of $5,518,902 in civil penalties, disgorgement, and prejudgment interest, alongside permanent injunctions preventing the defendants from participating in future securities offerings.
