SEC bags $5.52M default judgment as NanoBit's "registered broker" turns out to be unregistered fiction

The U.S. Securities and Exchange Commission has secured a final judgment of roughly $5.52 million against four entities and two individuals tied to the NanoBit crypto fraud scheme, the agency said on Monday. The U.S. District Court for the Eastern District of New York entered the order on June 16, finding the defendants liable for violating U.S. securities laws and issuing permanent injunctions barring them from issuing, purchasing or selling securities. The judgment came by default after the defendants failed to respond to the lawsuit.

According to the SEC's September 2024 complaint, the operators of NanoBit Limited ran the scheme between September 2023 and June 2024, soliciting at least 18 investors on social media platforms including Instagram before moving them into WhatsApp groups. There, the perpetrators impersonated financial professionals and falsely claimed that affiliate NanobitUS Securities was an SEC-registered broker, while promoting fake initial coin offerings that promised substantial returns and showing investors a fabricated dashboard depicting rising balances. "No transactions took place on the NanoBit platform and investors' funds in fact went to scheme participants who wired more than $2 million to bank accounts in Hong Kong and misappropriated hundreds of thousands of dollars' worth of investors' crypto assets," the SEC alleged.

In his order, U.S. District Judge Sanket J. Bulsara wrote that "the Defendants' default is willful; because of the default, no meritorious defense has been presented to the Court; and because there is no alternative to obtain the relief sought, the SEC would suffer unfair prejudice if default were not entered." NanoBit was ordered to pay a $1.18 million fine, more than $532,000 in disgorgement and nearly $81,200 in prejudgment interest, totaling about $1.8 million. Affiliates Radiant Horizons Limited, Sweet Karma Fashion Inc. and Zhao Tropical Deli Inc. were each ordered to pay a $1.18 million fine, while orchestrator Jiajie Liu was ordered to pay approximately $120,000 in penalties, disgorgement and prejudgment interest. A second individual, Hua Zhao, was also named in the default.

The case fits a broader pattern of SEC enforcement actions against crypto-themed fraud, even as the agency has softened its wider regulatory stance on digital assets. On May 29, the SEC charged a Texas man with running a scheme that raised more than $12 million from roughly 150 investors through claims of AI-powered trading bots delivering guaranteed returns. In April, the agency also charged crypto executive Donald Basile and two companies he controlled for raising roughly $16 million through false claims tied to the Bitcoin Latinum token.