In New York, a federal judge has ordered more than $5.5 million in monetary remedies in a case that the SEC says involved a relationship-investment scam carried out through WhatsApp chats and a sham crypto trading platform.
What happened?
On June 16, the court imposed $5,518,902 in disgorgement, prejudgment interest, and civil penalties. CoinDesk reported that the ruling was a default judgment entered in the Eastern District of New York against NanoBit Limited and five associated defendants after they did not appear in court.
According to the SEC, the scheme operated from September 2023 through June 2024, with participants using WhatsApp groups to build trust as supposed finance professionals and to persuade investors to invest with NanoBit.
The SEC said users were shown dashboards that appeared to reflect profitable crypto trades, even though the platform was not conducting any real crypto trading.
The complaint says that at least 18 investors lost nearly $1 million in cryptocurrency and traditional currency. It also alleges that more than $2 million was sent to bank accounts in Hong Kong and that large amounts of investors' crypto assets were diverted.
The defendants were the companies NanoBit Limited, Radiant Horizons Limited, Sweet Karma Fashion Inc., and Zhao Tropical Deli Inc., as well as Jiajie Liu and Hua Zhao.
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In addition, the court permanently barred all six from violating federal anti-fraud laws and from participating in securities offerings or transactions, though Liu and Zhao can still trade in their own personal accounts, CoinDesk reported.
Why does it matter?
Rather than relying on obviously suspicious pitches, alleged scammers can use messaging apps, fake trading dashboards, and the language of professional investing to make losses look like gains, at least until victims try to withdraw their money.
Once funds are sent, especially overseas or through crypto wallets, recovering that money can be extremely difficult.
The sector's complexity, limited consumer understanding, and patchwork oversight can create openings for abuse.
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What's being done?
The SEC described this case as part of a wider enforcement push targeting relationship-investment scams built around fake crypto platforms.
According to CoinDesk, the agency filed its complaint in September 2024 alongside a separate matter involving another alleged fake platform, CoinW6, and said the two cases were among its earliest actions in this area.
The judgment divides financial liability among the defendants. NanoBit Limited received the largest individual share, including more than $532,000 in disgorgement, nearly $82,000 in prejudgment interest, and a $1.1 million civil penalty.
The three other entity defendants were each ordered to pay $1.1 million in penalties, while Liu was assessed $120,000 and Zhao $55,000, with payment due within 30 days.
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