The U.S. District Court for the District of Arizona issued a default judgement against Debiex Friday, according to the Commodity Futures Trading Commission (CFTC).
The order found Debiex liable for fraud in connection with digital commodity trading and further found that the company misappropriated more than $2 million in customer funds. The court’s order bans Debiex from trading in any CFTC regulated markets or registering with the commission and requires the company to pay $221,466 in civil penalties, as well as more than $2.2 million in restitution.
“This judgment demonstrates the CFTC’s ongoing commitment to protecting U.S. citizens from online scams,” CFTC Director of Enforcement Brian Young said. “I commend Jenny Chapin, Dmitriy Vilenskiy and former Division Deputy Director Joan Manley for their diligent and innovative work on this matter.”
The order, dated March 13, found that Zhang Cheng Yang acted as a money mule when his digital asset wallet was used by Debiex to misappropriate another customer’s funds. Zhang is believed to be a Chinese national, officials said. The remaining digital assets in Zhang’s wallet, totally about $120,000 before transfer fees, were ordered to be returned to the Debiex customer from whom they were fraudulently taken.
The orders stem from an investigation into Debiex that started with a Jan. 17, 2024, complaint that the company operated publicly accessible internet domains that it used to target victims with sophisticate fraud schemes involving purported digital asset commodity trading. In the scheme “solicitors” would contact customers via social media platforms and befriend or romance them into opening and funding trading accounts with Debiex. Then “customer service” agents would set up and service Debiex trading accounts on behalf of the customers, while “money mules” like Zhang, had digital wallets that were used by Debiex to accept and/or misappropriate customer funds. Instead of using the funds to trade on behalf of the customers, Debiex misappropriated the customers’ digital wallets, with the company’s websites merely mimicking the features of legitimate live trading platforms. No actual trading took place on the customers’ behalf.
The CFTC said while it may not be able to recover money lost by wrongdoers, it would continue to fight vigorously to protect customers.