The Commodity Futures Trading Commission (CFTC) has filed a civil enforcement action against California resident Cunwen Zhu and his company, Justby International Auctions (Justby), alleging a $1.3 million fraud scheme. The case, filed in the U.S. District Court for the Central District of California, marks the CFTC’s first action targeting a “Pig Butchering” romance scam.
According to the complaint, Zhu and Justby engaged in a “romance fraud” – also known as a “Sha Zhu Pan” or “Pig Butchering” scheme – from approximately April 2021 through March 2022. This type of fraud involves building a friendly or romantic relationship with victims before convincing them to invest in fraudulent financial opportunities. At least 29 customers reportedly transferred over $1.3 million to Justby intending to trade digital assets and forex.
The CFTC alleges that instead of trading the funds, Zhu and Justby misappropriated them for personal use and transferred the majority to accounts controlled by other members of the scheme. No actual trading occurred on behalf of the customers, and the trading platforms presented to them were also controlled by the perpetrators. False trade records were provided to maintain the illusion of legitimate trading activity.
The CFTC is seeking restitution for defrauded customers, disgorgement of ill-gotten gains, civil monetary penalties, trading bans, and a permanent injunction against future violations of the Commodity Exchange Act (CEA) and CFTC regulations. Director of Enforcement Ian McGinley emphasized the CFTC’s commitment to holding individuals accountable for exploiting online connections for fraudulent purposes.
In a parallel criminal action, Zhu was charged with one count of wire fraud in the Middle District of Florida on April 19, 2023 (United States of America v. Cunwen Zhu, Case No. 3:23-cr-66-BDJMCR). The CFTC acknowledged the assistance of the U.S. Attorney’s office for the Middle District of Florida, the U.S. Secret Service, and the FBI’s Portland Office in the investigation.
The case is being pursued by CFTC staff members Dmitriy Vilenskiy, Karen Kenmotsu, Chrystal Gonnella, Kelly Makimoto-Murphy, Traci Rodriguez, and Paul G. Hayeck.
Source: CFTC.gov
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