Crypto platform Debiex must pay $2.5M in CFTC ‘pig butchering’ case

An Arizona federal court recently ordered the cryptocurrency platform Debiex to pay approximately $2.5 million following allegations of its involvement in a romance scam scheme. The U.S. Commodity Futures Trading Commission (CFTC) accused Debiex of perpetrating a scheme known as “pig butchering,” where staff created deceptive romantic connections with victims over social media to solicit investments.

In a ruling by Judge Douglas Rayes on March 13, 2024, the court granted a motion for summary judgment favoring the CFTC. As a result, Debiex was ordered to return around $2.26 million that it allegedly misappropriated from clients, alongside a civil penalty of nearly $221,500. Judge Rayes highlighted that Debiex’s failure to engage with the CFTC was not due to “excusable neglect,” indicating a lack of accountability from the platform.

The CFTC’s lawsuit detailed how Debiex targeted individuals via social media, luring them into investments through deceitful portrayal, where its employees masqueraded as successful traders. The platform reportedly defrauded five victims, collectively contributing around $2.3 million, which was misappropriated by the company.

Notably, the CFTC also implicated an individual named Zhāng Chéng Yáng, describing him as a “money mule” who helped facilitate the illicit operations by managing crypto wallets that received and concealed the victims’ funds. Prior to this, a default judgment against Zhāng was issued on March 12, revealing that he controlled a wallet at OKX that received digital assets illegitimately. The contents of this wallet, while minor in value, were ordered to be transferred to an unnamed victim.

The complaint elucidated how Debiex’s operatives provided fictitious trading reports, offering misleading information about account balances and supposed profits. The CFTC revealed that this information was largely fabricated, aiming to mislead customers while funneling their investments through various digital asset wallets to obscure the funds’ ultimate destinations.

As cryptocurrency scams continue to proliferate, incidents such as that involving Debiex underscore the necessity for increased vigilance in online trading platforms and the importance of regulatory oversight. The CFTC’s actions signify a robust approach to combating fraudulent operations in the crypto space, further emphasizing the need for potential investors to remain alert to the dangers associated with such platforms.