CFTC Charges Crypto Platform Debiex with ‘Pig Butchering’ Scheme

The Commodity Futures Trading Commission (CFTC) filed a lawsuit against the cryptocurrency platform Debiex and a Chinese national, Zhāng Chéng Yáng, Wednesday with accusations that they defrauded at leave five customers across the U.S. and misappropriated at least $2.3 million in customer funds.

Debiex represented itself as a digital-currency platform that facilitated futures trading and crypto-mining transactions for popular currencies, such as bitcoin and ether. In actuality, the company simply had customers transfer funds to Zhang’s digital wallet, the commission said.

Debiex is currently owned and operated by unknown officers and managers, whom the CFTC claims must have known the falsity of the purported platform’s transactions. The commission also said Debiex failed to register and said the platform’s deception began in March 2022, when its internet domains were registered, the complaint said.

The scheme involved at least three employee groups, which were supervised by Debiex managers. One employee, referred to as a “solicitor,” would contact customers via social media to solicit them to open and fund trading accounts with Debiex. Then “customer service” employees would help those customers set up trading accounts. Finally, “money mules”—including, but not limited to, Zhāng—had Debiex use their digital wallets to accept or misappropriate customer funds, the CFTC alleges.

The Debiex website imitated a legitimate live trading platform, but customers’ “trading accounts” did not participate in any cryptocurrency trading, the filing said. Debiex primarily targeted Chinese Americans, according to the complaint.

In one case, a customer identified as “Customer A” in court records sent $9,000 to a solicitor. The funds were converted into ethereum and tether fiat currencies, which Customer A then sent to a digital wallet address that the solicitor provided, which he believed belonged to Debiex. In reality, his and other customers’ funds were transferred among numerous digital wallets in an attempt to muddle their destination. The CTFC said there is no evidence that the customers’ digital assets were ever “traded” for other digital assets, the complaint said.

While Customer A noticed that the digital wallets he sent funds to were changing, he trusted the solicitor that the funds were being properly invested. A different customer, referred to as “Customer E,” liquidated his retirement account, worth about $250,000; converted the funds to cryptocurrency; and sent it all to what he believed was a Debiex account, the filing said.

The firm’s customer service employees duped customers with fictious information regarding profits and losses, account balances, digital-asset commodity trading transactions, and deposits and withdrawals of funds into and out of their trading accounts.

The CFTC is requesting that the court enjoin the defendants from engaging in the previously mentioned conduct, as well as court orders to issue full restitution to the defrauded customers and to account for all customer funds received.

Attorneys Jennifer J. Chapin, of Kansas City, and John M. Manley, of Washington, D.C., are representing the CFTC. Counsel did not return a request for comment. Counsel has not yet made an appearance for the defendants.

From: Law.com