The Commodity Futures Trading Commission (CFTC) has charged digital asset platform Debiex for engaging in a deceptive scheme known as “pig butchering,” which resulted in the loss of $2.3 million from investors.
On Firday, the CFTC filed a complaint against Debiex and Zhāng Chéng Yáng in the U.S. District Court for the District of Arizona.
According to the CFTC, individuals associated with Debiex employed a tactic commonly used in romance scams.
They developed friendly or romantic relationships with potential customers, deceiving them to gain their trust.
Subsequently, they persuaded these individuals to open and finance trading accounts with Debiex.
The solicitors claimed to possess knowledge that could generate substantial profits in cryptocurrencies like Bitcoin and Ether, as stated in the CFTC’s complaint.
Regulators allege that Debiex misappropriated approximately $2.3 million from five customers as part of their fraudulent scheme.
The CFTC is seeking restitution for the affected customers, as well as 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.
Debiex Targeted Asian Americans
The CFTC revealed that Debiex specifically targeted Asian Americans, using U.S.-based social media platforms to entice them into opening and funding trading accounts.
Instead of utilizing the funds on behalf of the customers, as promised, Debiex misappropriated their digital assets.
The CFTC stated that the Debiex websites were designed to resemble a legitimate live trading platform, but they were merely a façade.
No actual trading activity occurred on behalf of the customers.
This marks the CFTC’s second case involving the pig butchering scheme in recent months.
Commissioner Kristin Johnson explained that the term refers to the practice of soliciting consumers to participate in a fraudulent investment opportunity, with the intention of exploiting them later.
Johnson urged the public to remain informed about potential fraud and abuses in digital asset markets by visiting the CFTC’s investor advisory page.
As reported, Erin West, Deputy District Attorney in Santa Clara, California, has revealed that receives an average of 5-6 emails daily from individuals who have fallen prey to pig butchering.
“We are receiving 5-6 emails a day from people who are victims of pig butchering. The most recent victim lost $5 million dollars and that’s not even the biggest amount one victim has lost to this scam.”
Compounding the issue, the stolen funds are funneled overseas to transnational criminal organizations in Myanmar and Cambodia, using trafficked individuals as virtual slaves to carry out the pig butchering scams.
According to TRM Labs, a leading blockchain intelligence company, the FBI’s Internet Crime Complaint Center (IC3) has received over 4,300 complaints related to pig butchering, with cumulative losses surpassing $400 million.
Reports from FBI field offices indicate that the surge in pig butchering shows no signs of abating.
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