Court rules against NanoBit and affiliates over investor fraud scheme.
SEC says investors were misled by a fake crypto investment platform
Photo Credit: Unsplash/Stephen Walker
The US SEC has obtained a final court judgment against NanoBit Limited, in a case alleging that the scheme defrauded approximately $5.4 million from at least 18 investors between 2023 and 2024. The SEC launched an investigation into the firm almost two years ago, and the regulator's statement was made almost two weeks after the US District Court for the Eastern District of New York made a final judgment against four companies and two people who were associated with the NanoBit scheme on June 16th.
According to the SEC, NanoBit's creators fraudulently represented themselves as financial professionals in WhatsApp groups and misled investors into making deposits to their fraudulent platform. The money was actually sent to the scheme participants, according to the SEC. Injunctions were imposed on the defendants by the court for violation of US securities laws. The court prohibited the defendants from issuing, purchasing, or selling securities.
The NanoBit judgment involved a penalty of $1.8 million (roughly Rs. 17.04 crore), disgorgement of over $532,000 (roughly Rs. 5.04 crore) in the form of ill-gotten gains, along with prejudgment interest of around $81,957 (roughly Rs. 76.86 lakh), adding up to a total of about $1.8 million (roughly Rs. 11.17 crore). Meanwhile, Jiajie Liu, one of the key individuals behind the scheme, was ordered to pay approximately $120,000 (roughly Rs. 1.14 crore) in penalties, disgorgement, and prejudgment interest.
According to the complaint filed by the SEC in September 2024, investors in NanoBit were initially contacted through social media platforms such as Instagram before they were enrolled in the WhatsApp groups.
Investors were tricked by showing them a false dashboard depicting gains in their investment, which made them believe that the money was increasing. It made the victims believe that it had an affiliate firm called NanobitUS Securities, which is registered as an SEC broker, and that it conducted a false initial coin offering (ICO).
However, “no transactions took place on the NanoBit platform, and investors' funds in fact went to scheme participants who wired more than $2 million (roughly Rs. 18.93 crore) to bank accounts in Hong Kong and misappropriated hundreds of thousands of dollars' worth of investors' crypto assets,” the securities regulator alleged.
As digital asset scams are becoming more and more sophisticated using social media and message apps, this case is a reminder of the need for vigilance among investors as well as regulators.
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