The SEC won its first relationship-scam case after a court ordered the operators of a fake crypto platform to pay more than $5.5 million.
Key Points:
- A New York federal court entered a default judgment against four entities and two individuals tied to the NanoBit fraud.
- The scheme stole over $2 million by posing as advisers in WhatsApp groups and pushing a sham trading platform.
- It marks the agency's first enforcement win over relationship investment scams aimed at crypto buyers.
NanoBit Judgment Details
The U.S. District Court for the Eastern District of New York entered a final judgment by default on Jun. 16 against NanoBit Limited and five other defendants who never appeared to contest the allegations.
The order pushed total penalties past $5.5 million across the group, capping a case the regulator first filed in 2024. NanoBit alone must pay roughly $1.79 million in disgorgement, interest and a civil fine.
Three connected entities, Radiant Horizons, Sweet Karma and Zhao Tropical Deli, each drew a civil penalty above $1.18 million for their part in the scheme. The court permanently barred all six from selling securities and ordered the two individual defendants to pay $50,000 penalties on top of their returned profits.
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SEC Investor Warning
Court filings describe a scheme that ran from September 2023 to June 2024 and leaned on human trust rather than any real trading technology. Participants posed as seasoned finance professionals inside WhatsApp groups, then nudged victims toward NanoBit and a string of fake initial coin offerings. To look legitimate, the platform falsely claimed its affiliate held an SEC broker registration.
No real trades ever cleared on the platform, investigators found, and withdrawals stalled the moment victims tried to cash out their supposed profits. Participants instead wired more than $2 million to bank accounts in Hong Kong and pocketed hundreds of thousands of dollars in crypto assets.
The agency's investor education office used the ruling to renew a broader warning about relationship scams that increasingly target crypto buyers. It urged people to lean on official records rather than chat-group tips when weighing any offer. Anyone can check a seller through the Investor.gov database before moving a dollar.
Crypto Romance Scams Surge
The judgment stands among the first U.S. actions aimed squarely at relationship investment fraud, a category often labeled pig butchering. Such schemes cultivate personal bonds over weeks or months before steering targets into polished platforms that flash fabricated profits and then quietly block every withdrawal.
These frauds have multiplied as crypto adoption widened and scammers refined their scripts. In May, a New Zealand woman lost nearly $800,000 to fraudsters posing as a retired U.S. Army general, a case authorities tied to the same playbook of slow, patient deception.
Regulators say the pattern keeps surfacing across borders, frequently beyond the reach of recovery.
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