A New York federal court has handed down over $5 million in penalties to four enterprises and two individuals related to the crypto entity NanoBit. This decision follows allegations of deceit by creating sham relationships via WhatsApp, as disclosed by the US Securities and Exchange Commission (SEC). The judgment was finalized on June 16, with the comprehensive report emerging by June 29.
What Lies Beneath the Fraud?
The SEC filed its charges in September 2024, marking its inaugural legal action against “relationship-based investment fraud” within the crypto domain. This strategy unfolded between September 2023 and June 2024. Using faux identities in WhatsApp chat groups to pose as investment experts, the culprits gained the trust of potential investors before steering them towards NanoBit.
Judicial Orders and Implications
The SEC reported fraudulent activities of the defendants, who misrepresented NanobitUS Securities as a registered broker-dealer. Promises of lucrative returns through initial coin offerings lured many, while in reality, there was no trading. Instead, amounts exceeding $2 million were redirected overseas, with a portion routed from investors straight to accounts in Hong Kong.
The SEC clarified that the NanoBit platform witnessed no legitimate trading, with investors’ money being siphoned off to foreign accounts.
Court records indicate that NanoBit Limited was mandated to remit $532,649 in returned profits, $81,957 in interest, and a $1,182,251 civil penalty. The remaining defendants—Zhao Deli, Sweet Karma, and Radiant Horizons—incurred identical fines of $1,182,251 each.
Two individuals incurred lesser but prominent penalties. Jiajie Liu faced fines of $50,000, $9,485 in interest, and $60,603 in returned profits. Hua Zhao was fined $50,000 and directed to pay back $4,500 with an additional $704 in interest.
- NanoBit Limited’s total financial obligation amounted to nearly $2 million, covering penalties and disgorgements.
- The SEC emphasized judicial vigilance, resulting in punitive measures against fraudulent crypto actors.
- The court’s directive includes comprehensive injunctions against future fraudulent securities practices by the involved parties.
Echoing the NanoBit situation, the SEC also spotlighted another venture, CoinW6, for similar deceptive tactics through social platforms like Instagram and LinkedIn. Fraudsters established credibility before retasking investments into non-existent accounts, showcasing a perilous fraud blueprint.
Gurbir S. Grewal, head of the SEC’s Enforcement Division, highlighted the growing danger of relationship-based frauds and how social media is increasingly weaponized to erode investor trust.
Potential investors are urged by the SEC to substantiate the legitimacy of any investment promoters or companies through authenticated resources like Investor.gov and to exercise due diligence in verifying claims encountered on social media platforms. Todd Brody and Jeremy Brandt, alongside the SEC’s Cyber and Emerging Technologies Unit, orchestrated the legal onslaught against this fraudulent ruse.
