A U.S. federal court has ordered NanoBit Limited and several associated individuals and entities to pay a combined over $5 million in penalties and disgorgement for a cryptocurrency investment fraud scheme. The case marks the SEC's first enforcement action targeting "relationship-based investment fraud" in the crypto sector.
How the Fraud Worked: Fake Finance Pros on WhatsApp
In its September 2024 lawsuit, the SEC detailed that between September 2023 and June 2024, perpetrators posed as finance professionals in WhatsApp groups to gain trust, then directed victims to NanoBit. The platform falsely claimed its affiliate NanobitUS Securities was a registered broker-dealer and promoted fake initial coin offerings (ICOs) with misleading promises of high returns. In reality, no actual trading occurred on NanoBit. Over $2 million was moved overseas, and other crypto assets were sent directly to bank accounts in Hong Kong.
Court Ruling: Penalties Exceed $5 Million
Court documents show NanoBit Limited must pay $532,649 in disgorgement, $81,957 in interest, and a $1,182,251 civil penalty. Three other defendants — Zhao Deli, Sweet Karma, and Radiant Horizons — were each fined $1,182,251. Individual defendant Jiajie Liu was fined $50,000, plus $9,485 in interest and $60,603 disgorgement; Hua Zhao was fined $50,000, with $4,500 disgorgement and $704 interest. The court also issued permanent injunctions against further violations of anti-fraud provisions under the Securities Act of 1933 and the Securities Exchange Act of 1934.
What Authorities Say About Social Media Traps
The SEC separately charged platform CoinW6 for using Instagram and LinkedIn to lure investors into another fraud. Gurbir S. Grewal, then head of the SEC's Enforcement Division, warned that relationship-based investment scams involving crypto assets are an escalating risk for retail investors, with fraudsters weaponizing social media to manipulate trust. The SEC's Office of Investor Education advises against relying on social media group chat information for investment decisions and urges verification on Investor.gov. The case was handled by Todd Brody and Jeremy Brandt from the SEC's New York Regional Office, with support from the agency's Cyber and Emerging Technologies Unit.