In a recent move, the Commodity Futures Trading Commission (CFTC) launched an aggressive action against a businessman hailing from California with his firm. The reason: a meticulously constructed romance scam. This elaborate scheme manipulated unsuspecting investors, who were stripped off more than $1 million, the CFTC reported in a press release on a recent Thursday.
The Intricate ‘Pig Butchering’ Romance Scam
The CFTC’s lawsuit, initiated in the U.S. District Court for the Central District of California, accuses Cunwen Zhu, a Californian entrepreneur. Zhu reportedly deceived no less than 29 clients, leading to a loss of over $1.3 million. These funds, earmarked for digital commodity and forex trading, were funneled through Zhu’s enterprise, Justby International Auctions. The timeline of these transgressions spans from April 2021 until March 2022.
Contrary to customer promises, their funds were not invested in cryptocurrency and forex exchanges. Instead, Zhu redirected the money for personal enrichment. Most of the misappropriated funds were transferred to bank accounts, digital wallets, and digital asset trading platforms controlled by his accomplices in this alleged scam.
Emotional Manipulation: A New Age Tactic in Financial Scams
The collaborators of Zhu devised romantic bonds with the victims of this alleged scam. The motive was to “inflate their trust with fabrications before luring them into a deceptive financial opportunity,” the CFTC declared. This type of romance fraud, called “Pig Butchering,” has surged in prevalence amidst the pandemic, as solitude spikes among those living under stay-at-home mandates.
CFTC Director of Enforcement, Ian McGinley, expressed concern over this troubling development. He remarked, “As people grappled with the isolation stemming from the pandemic, seeking to forge online connections, scammers found a novel playground to exploit and take advantage of the public.”
CFTC’s Persistent Efforts Against Romance Scams Involving Digital Assets
This incident doesn’t mark the CFTC’s first warning about romance scams tied to digital assets. Over recent months, the CFTC has proactively issued customer protection fraud advisories and articles. The aim is to equip users with the necessary knowledge to protect themselves from such scams.
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