The Commodity Futures Trading Commission (CFTC) has filed accusations against cryptocurrency exchange Debiex, alleging a romance scam that misappropriated $2.3 million. The CFTC’s complaint, filed in the U.S. District Court for the District of Arizona, accuses Debiex and an individual, Zhāng Chéng Yáng, of engaging in fraudulent activities known as “hog slaughter” to defraud investors.
According to the CFTC, from March 2022 onwards, Debiex employees and/or managers engaged in friendly or romantic relationships with potential customers. They reportedly reported falsehoods to gain the trust of these individuals, then encouraged them to open and fund trading accounts with Debiex. The scheme is designed to assure customers that their funds will be invested in cryptocurrencies. However, the CFTC alleged that these funds were misappropriated for personal gain.
Despite only identifying five victims over a two-year period, the regulator claims more than $2 million was stolen through the scheme. This case highlights the growing trend of romance scams in the cryptocurrency sector, where fraudsters use the lure of digital assets to financially exploit victims. Such scams are on the rise with a significant increase in reported losses due to cryptocurrency related scams in the United States. In 2022 alone, over 46,000 people reported losing money to crypto-related scams, a staggering 183% increase from $907 million in 2021 to $2.57 billion in 2022.
This incident is not an isolated case in the world of cryptocurrency exchanges. In May 2023, Binance faced allegations from a Texas woman who claimed she was defrauded out of $8 million by a man she met on Tinder. The woman claimed that Binance should be held liable because it provided exchange services to the fraudster, although a US judge later ruled that there was no evidence that Binance was involved in the theft.
The Debiex case serves as a cautionary tale for people dealing with cryptocurrency platforms, especially as Valentine’s Day approaches, a time when romance scams typically ramp up. The CFTC’s action against Debiex underscores the need for vigilance in the digital asset space, where the convergence of online dating and investing can create ripe opportunities for fraud.
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