The Commodity Futures Trading Commission charged digital asset platform Debiex with fraud after the agency said it used a romance scam tactic known as “pig butchering” to take $2.3 million from investors.
The CFTC charged Debiex and Zhāng Chéng Yáng, who the agency says might have acted as a so-called “money mule” for the platform. The complaint was filed in the U.S. District Court for the District of Arizona this week.
Unidentified people involved with Debiex “cultivated friendly or romantic relationships with potential customers” by lying to get their trust and then asked them to open and fund trading accounts with Debiex, the CFTC said in a statement on Friday.
Solicitors involved said they had knowledge that could earn major profits in crypto assets such as bitcoin and ether, the CFTC said in an attached complaint.
Regulators say Debiex misappropriated about $2.3 million from five customers as part of the scheme. The agency is seeking restitution for those customers, disgorgement, monetary penalties, trading bans and a permanent injunction.
“This case is an example of the Division of Enforcement’s core mission—bringing justice for victims, rooting out misconduct, and holding accountable those who violate the anti-fraud provisions of the CEA,” CFTC Director of Enforcement Ian McGinley said in a statement.
The CFTC said Debeix specifically targeted Asian Americans in its scheme and contacted customers through U.S. based social media platforms to lure them in and then get customers to open and fund trading accounts.
Instead of using the funds on behalf of the customers, as they said they would, Debiex misappropriated customers’ digital assets, the agency said.
“Unbeknownst to the customers, and as alleged, the Debiex websites merely mimicked the features of a legitimate live trading platform and the ‘trading accounts’ on the websites were a complete ruse,” the CFTC said. “No actual trading took place on the customers’ behalf.”
CFTC’s second pig butchering case
CFTC Commissioner Kristin Johnson noted that Friday’s case was the agency’s second pig butchering case over the past few months.
“As the graphic name suggests, these schemes liken the practice of soliciting consumers to participate in a fraudulent investment opportunity to ‘fattening up’ an unsuspecting pig prior to slaughtering it,” Johnson said in a statement.
The CFTC first brought a similar case in June involving a digital asset commodities and forex firm.
“In the current case, the fraudsters used a shared native language and other similar evidence of shared identity to build trust—only to later exploit these intimate connections,” Johnson said. “I strongly encourage all members of the public to stay informed about the potential fraud and abuses in digital assets markets by visiting our investor advisory page.”
