A federal judge in New York has entered a decisive $5.5 million default judgment against NanoBit Limited and five affiliated defendants. The ruling marks a significant victory for the U.S. Securities and Exchange Commission (SEC) in its ongoing enforcement actions against relationship-investment schemes, colloquially known as “pig-butchering” scams, that leverage fake cryptocurrency trading platforms to defraud retail investors.
The Anatomy of the NanoBit Crypto Fraud
According to the SEC complaint originally filed in September 2024, the fraudulent operations spanned from September 2023 to June 2024. Scheme participants posed as financial-industry professionals within WhatsApp group chats. By cultivating personal relationships and building trust with users over time, the actors successfully directed victims to deposit fiat and digital assets into the NanoBit platform.
Although the platform’s user interface featured custom dashboards displaying highly profitable trades, the SEC revealed that NanoBit never executed any actual cryptocurrency transactions. Instead, the platform served as a cosmetic facade to hide the immediate theft of capital. In total, at least 18 investors lost nearly $1 million in combined cryptocurrency and fiat holdings.
Offshore Fund Routing and Fake Registrations
Rather than funding legitimate market positions, investor capital was diverted to bank accounts in Hong Kong. The SEC’s investigation tracked over $2 million wired offshore, alongside the misappropriation of hundreds of thousands of dollars worth of investor crypto assets. To project legitimacy, NanoBit falsely claimed that its affiliate, NanobitUS Securities, was registered with the SEC and associated with reputable financial institutions, highlighting the sophisticated marketing tactics employed in modern fintech scams.
Breakdown of the $5.5 Million Judicial Order
The U.S. District Court for the Eastern District of New York ordered a combined total of $5,518,902 in disgorgement, prejudgment interest, and civil penalties. Because 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 judge entered a default judgment, noting the default was willful with no meritorious defense presented.
- NanoBit Limited: Liable for over $532,000 in disgorgement, approximately $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. are each penalized $1.1 million.
- Individual Defendants: Jiajie Liu must pay a civil penalty of $120,000, while Hua Zhao is penalized $55,000. All payments are due within 30 days.
Furthermore, the court has issued permanent injunctions barring all six defendants from participating in future securities offerings or violating federal anti-fraud provisions. While the corporate entities are heavily restricted, the individuals Liu and Zhao retain the right to trade securities exclusively within their personal brokerage accounts.
Broader Regulatory Context
This case represents a milestone in cryptocurrency litigation. Alongside a parallel action targeting the platform CoinW6, the NanoBit prosecution represents one of the SEC’s initial regulatory actions specifically targeting relationship-based investment platforms. Regulatory bodies continue to warn the public that high-yield investment promises delivered via unsolicited messaging applications are primary red flags for digital asset fraud.
Frequently Asked Questions (FAQ)
What is a “pig-butchering” investment scam?
A relationship-investment scam, or “pig-butchering” scam, involves fraudsters building trust with victims over weeks or months—often via messaging apps like WhatsApp—before steering them toward fraudulent investment platforms where their funds are stolen.
What does a default judgment mean in SEC enforcement?
A default judgment is entered by a court when the defendants fail to appear or defend themselves against the legal charges. The court rules in favor of the plaintiff (the SEC) and mandates the requested financial and regulatory penalties.
How can investors verify if a crypto platform is registered?
Investors can verify registration status using public databases such as the SEC’s EDGAR system or FINRA’s BrokerCheck. Legitimate financial entities must provide verifiable registration numbers and documentation.
