Romance Scam: How Bogus Crypto Exchange Firm Debiex Duped Investors Of $2.3 Million

Bogus cryptocurrency exchange Debiex has been charged for orchestrating romance scams that led to losses of over $2.3 million. The U.S. Commodity Futures Trading Commission (CFTC) has accused the company’s senior staff members of misleading potential customers to gain their trust before convincing them to open accounts with the crypto exchange. While Debiex assured these customers that their funds would be invested in crypto, the staff allegedly misappropriated the funds for personal gain.

“The CFTC’s complaint alleges Debiex’s unidentified officers and/or managers cultivated friendly or romantic relationships with potential customers by communicating falsehoods to gain trust and then solicited them to open and fund trading accounts with Debiex,” the regulator said in an official release.

What Are Romance Scams?

In a romance scam, criminals pretend to have romantic intentions towards a victim, to gain his/her affection and trust. They then use the goodwill to make the victim perform a desirable action that will benefit the scamsters. This can be asking for money, sending cryptocurrencies, or in this case opening accounts and investing money with a firm.

How Did Debiex Staff Run the Romance Scams?

According to the agency’s complaint, the unnamed officers and managers of Debiex cultivated friendly or romantic relationships with several customers to get them to open accounts and invest with the firm. They allegedly used websites like https://www.debiex.com and https://www.debiex.net which were created in March 2022 to particularly target Asian-Americans living in the U.S. CFTC Commissioner Kristin N. Johnson said that the scheme targeted the specific demographic as the fraudsters used a shared native language and similar identity to build trust.

After opening their accounts, the employees pursued them to invest in cyrpto. They allegedly took money from the victims promising that it would be invested in cryptocurrencies. However, instead of using the funds to trade on behalf of the customers, they misappropriated the customers’ digital assets.

It was also found the Debiex websites merely mimicked the features of a legitimate live trading platform and the ‘trading accounts’ on the websites were completely fake. There was no trading happening on behalf of the customers.

As per the CFTC release, Debiex pocketed about $2.3 million from about five victims who fell for the scam. Further, the regulator named Zhang Cheng Yang as a relief defendant. Yang is accused of acting as a money mule of Debiex as his digital wallet was used to misappropriate one of the victim’s funds.

How to Be Safe From Romance Scams?

As per the CFTC, to avoid being a victim of romance or other scams in the trading space, investors should avoid taking advice from people from dating and social media platforms. There has been an increase in these scams that lure victims into sending their money to fraudulent websites that claim to trade foreign currency exchange (forex) contracts, precious metals contracts, and/or digital assets like cryptocurrencies.

Further, the regulator has urged the public to thoroughly verify a company’s registration with the CTFC before investing money or sharing access to any of their digital assets. A company’s registration can be checked using NFA BASIC. Therefore, customers should avoid putting their money into unregistered companies.

Lastly, people who have come across suspicious activities or information can report such instances to the Division of Enforcement via a toll-free hotline at 866-FON-CFTC (866-366-2382). Employees working in such fraudulent organizations can also file a tip-off or complaint with the Whistleblower Office and they may receive between 10 and 30 percent of the monetary sanctions collected.