CFTC charges California man in $1.3M ‘Pig Butchering’ crypto romance scam, defrauding investors of funds allocated for digital asset trading.
According to a press release issued on Thursday, the Commodity Futures Trading Commission (CFTC) has taken legal action against a California man and his company for orchestrating an intricate romance scam that defrauded numerous investors of over $1 million.
Allegations Against Cunwen Zhu For Deceiving Investors And Misusing Funds
The CFTC has lodged a complaint in the U.S. District Court for the Central District of California, accusing Cunwen Zhu, a California-based businessman, of deceiving at least 29 customers. Zhu allegedly swindled them out of more than $1.3 million, which was intended for digital asset commodity and forex trading through his company, Justby International Auctions, during the period between April 2021 and March 2022.
Instead of utilizing the investors’ funds for crypto and forex exchanges, Zhu diverted the money for personal purposes, transferring the majority to bank accounts, digital wallets, and digital asset trading platforms controlled by individuals involved in his purported scheme.
Zhu’s partners cultivated romantic relationships with his alleged victims, to “fatten them up with falsehoods, before soliciting the customer to participate in a fraudulent financial opportunity,” as stated by the CFTC in an official statement.
Rise Of The “Pig Butchering” Romance Scam During The Pandemic
Since the onset of the pandemic, the romance scam named “Pig Butchering” has witnessed a growing prevalence, coinciding with a rise in loneliness among individuals subjected to stay-at-home orders.
As people sought to escape the isolation of the pandemic and form a connection to others online, fraudsters saw a new venue to prey on and to take advantage of the public
expressed Ian McGinley, the Director of Enforcement at the CFTC.
The CFTC has previously raised concerns about romance-related scams that involve digital assets, indicating that this is not the first instance. In recent months, the CFTC has released multiple fraud advisories and articles aimed at safeguarding customers and discouraging them from becoming victims of such scams.