The U.S. Securities and Exchange Commission (SEC) has finalized its enforcement action against the cryptocurrency platform NanoBit, ordering the defendants to pay more than $5 million in penalties for a fraudulent relationship investment scheme. The case, originally filed in September 2024, marked the SEC’s first enforcement action targeting relationship investment scams in the crypto space.
According to the SEC, from approximately September 2023 through June 2024, NanoBit and its participants used WhatsApp groups to pose as financial professionals. They cultivated trust with retail investors and steered them toward fake initial coin offerings (ICOs), falsely claiming that NanoBit’s affiliate was an SEC-registered broker. In reality, no legitimate transactions occurred on the platform. Instead, more than $2 million was wired to bank accounts in Hong Kong, and hundreds of thousands of dollars in investors’ crypto assets were misappropriated.
The resolution underscores how social engineering—through messaging apps, professional-sounding personas, and phony regulatory claims—can be weaponized to make fraudulent platforms appear legitimate. The SEC emphasized that the deception began before any token purchase, with false identities and private groups designed to build credibility.
As part of the final judgment, the SEC also highlighted an investor alert warning the public about the growing use of social media and messaging apps in crypto investment scams. The case demonstrates that even absent complex technology, frauds built on false statements and misappropriation remain squarely within securities enforcement.
