TLDR
- Arizona federal judge ordered crypto platform Debiex to pay $2.5 million in a CFTC “pig butchering” case
- Debiex staff created fake romantic relationships with victims on social media to lure them into investing
- Five victims lost approximately $2.3 million to the scam
- ZhÄng ChĆ©ng YĆ”ng served as a “money mule” whose crypto wallets received stolen funds
- Judge ordered the transfer of nearly 63 ETH and $5.70 USDT from ZhÄng’s OKX wallet to a victim
A US federal judge has ordered crypto platform Debiex to pay approximately $2.5 million after the platform was found to be operating a “pig butchering” romance scam. The ruling came on March 13 when Arizona federal court Judge Douglas Rayes granted the Commodity Futures Trading Commission’s (CFTC) motion for summary judgment.
The court ordered Debiex to return around $2.26 million stolen from customers. This amount includes an additional civil penalty of $221,500.
Judge Rayes stated there was no evidence that Debiex’s failure to respond to the CFTC’s claims was due to “excusable neglect.” The platform did not contest the charges brought against it.
Romance scam
The CFTC filed the lawsuit against Debiex in January 2024. The regulatory body accused the platform of operating a romance scam that targeted victims through social media.
The scam, known as “pig butchering,” involved staff members creating fake romantic relationships with potential victims. These relationships were designed to build trust before convincing victims to invest in the fraudulent platform.
The scheme successfully trapped five victims. These individuals deposited a total of approximately $2.3 million onto the Debiex platform.
According to the CFTC, Debiex marketed itself as a “Blockchain Network Decentralized perpetual contract trading platform.” The platform claimed to offer futures trading and “Mining transactions” to its users.
Staff members, who presented themselves as female, built relationships with victims through constant messaging. They also shared fake photos of themselves while claiming to be highly successful crypto traders.
Once victims created accounts and transferred their crypto to the platform, Debiex provided them with false information. This included fake data about account balances, trading positions, and profits.
“All of this information was most likely false,” stated the CFTC in its complaint. The evidence showed that victims’ digital assets were sent to numerous wallets to hide their final destination.
The judge also ruled against ZhÄng ChĆ©ng YĆ”ng, who was accused of being a “money mule” for Debiex. His crypto wallets were allegedly used to accept and steal victims’ funds.
On March 12, Judge Rayes granted a CFTC motion for default judgment against ZhÄng. The judge found that ZhÄng controlled a crypto wallet with OKX “that received digital assets to which he had no legitimate claim.”
The court noted that OKX was “voluntarily preserving” the cryptocurrency in ZhÄng’s account. The judge ordered the contents of the wallet to be transferred to an unnamed victim.
The funds in ZhÄng’s wallet included $5.70 worth of Tether (USDT) and nearly 63 Ether (ETH). The total value of these assets was approximately $119,500.
Debiex’s staff targeted victims through social media
The CFTC’s complaint details how Debiex’s staff targeted potential victims through social media. They directed these individuals to websites created by Debiex that claimed to offer cryptocurrency trading services.
The case highlights the dangers of romance scams in the cryptocurrency space. These scams often use social media and messaging platforms to target victims.
The “pig butchering” technique involves scammers gaining trust over time. They then use this trust to convince victims to make increasingly larger investments.
The ruling represents a win for the CFTC in its efforts to protect consumers from cryptocurrency scams. It also serves as a warning to those operating similar schemes.
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