A federal court in New York handed down a default judgment exceeding $5.5 million against entities and individuals involved in a sophisticated cryptocurrency scam that exploited WhatsApp groups and a fraudulent trading platform. The defendants failed to appear in court, resulting in the imposition of disgorgement, prejudgment interest, and civil penalties.
The scheme operated between September 2023 and June 2024, according to the U.S. Securities and Exchange Commission (SEC). Scammers created WhatsApp communities posing as legitimate financial professionals, leveraging these social connections to build trust and entice at least 18 investors to commit funds. Victims were shown fake trading dashboards designed to simulate profitable crypto transactions, although no actual trading occurred on the platform.
The fraud led to nearly $1 million in losses from both cryptocurrency and traditional currency investments. Over $2 million of the illicit proceeds were funneled into bank accounts based in Hong Kong, alongside the diversion of significant investor crypto assets. The entities targeted by the court order included NanoBit Limited, Radiant Horizons Limited, Sweet Karma Fashion Inc., and Zhao Tropical Deli Inc., as well as individuals Jiajie Liu and Hua Zhao.
The judgment permanently bars all defendants from violating federal anti-fraud laws and from engaging in securities offerings or transactions. However, the two individuals involved retain the ability to trade within their personal accounts.
This case illustrates how scammers increasingly rely on messaging platforms combined with fabricated investment dashboards and professional jargon to mask fraudulent activities. Such tactics deepens challenges for investors, especially when funds are routed overseas or through cryptocurrency wallets, complicating efforts to recover stolen money. The complexity of the crypto sector, coupled with uneven regulation and limited public understanding, creates vulnerabilities for these schemes to flourish.
The SEC considers this ruling part of a broader effort to crack down on relationship-based investment fraud intertwined with sham crypto platforms. Alongside this case, the agency has pursued similar actions against other fraudulent platforms, marking some of its initial enforcement moves in this realm.
The financial penalties were apportioned among the defendants with NanoBit Limited bearing the largest share: over $532,000 in disgorgement, nearly $82,000 in prejudgment interest, and a $1.1 million civil penalty. The other corporate defendants each faced $1.1 million in penalties, while Liu and Zhao were fined $120,000 and $55,000 respectively. All amounts must be paid within 30 days.