NanoBit Defendants Hit With $5.5M Judgment in SEC’s First Relationship Scam Case
The U.S. District Court for the Eastern District of New York entered a final default judgment on June 16 against four entities and two individuals charged in connection with the NanoBit relationship investment scam, ordering more than $5.5 million in combined penalties, disgorgement, and prejudgment interest and permanently barring them from issuing, offering, or selling securities.
The court ordered NanoBit Limited to pay disgorgement of $532,649, prejudgment interest of $81,957, and a civil penalty of $1,182,251, for a total of $1,796,857. Three related entities – Radiant Horizons Limited, Zhao Tropical Deli Inc., and Sweet Karma Fashion Inc. – were each ordered to pay a civil penalty of $1,182,251. Individual defendants Jiajie Liu and Hua Zhao were ordered to pay $120,088 and $55,204, respectively, combining disgorgement, prejudgment interest, and civil penalties. All amounts are due within 30 days of entry of judgment.
The judgment permanently enjoins the defendants from violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, and Section 17(a) of the Securities Act of 1933, and bars them from participating in the issuance, purchase, offer, or sale of any security. Liu and Zhao retain the right to buy and sell securities for their personal accounts.
The judgment was entered by default after none of the defendants appeared or opposed the U.S. Securities and Exchange Commission’s motion. The court found that the defendants’ default was willful and that the SEC would suffer prejudice without entry of judgment.
As AltsWire reported in September 2024, the SEC’s original complaint – the agency’s first enforcement action against relationship investment scams – alleged that scheme participants used WhatsApp groups to impersonate financial industry professionals, built trust with at least 18 investors, and then funneled their money into the fictitious NanoBit crypto asset trading platform.
NanoBit falsely claimed that its affiliate, NanobitUS Securities, was an SEC-registered broker. Scheme participants wired more than $2 million to bank accounts in Hong Kong and misappropriated hundreds of thousands of dollars’ worth of investors’ crypto assets. Total investor losses were alleged at approximately $967,835 in combined crypto assets and fiat currency.
The default judgment covers a majority of the defendants named in the original complaint. The status of charges against Fei Liao, a defendant named in the 2024 complaint, is not addressed in the June 16 order.
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