US CFTC Secures $2.3 Million Federal Court Judgment in Debiex Romance Scam Involving Digital Assets
On 21 March 2025, the United States Commodity Futures Trading Commission (US CFTC) confirmed that the United States District Court for the District of Arizona has issued two judgments (Judgment dated 12 March 2025, Judgment dated 13 March 2025) against Debiex and relief defendant Zhang Cheng Yang for their roles in a digital asset-based romance scam. The judgments require restitution, financial penalties, and permanent bans from US CFTC-regulated markets.
- The Judgments stem from a US CFTC complaint filed on 17 January 2024, alleging that Debiex misappropriated $2.3 million through a fraudulent scheme known as “Sha Zhu Pan” (pig butchering), wherein victims were lured into fake romantic relationships and induced to deposit funds under the guise of crypto trading.
- Debiex was found liable for violations of Section 6(c)(1) of the United States Commodity Exchange Act (7 U.S.C. § 9(1)) and US CFTC Regulation 180.1(a), involving fraudulent solicitation, misrepresentation, and digital asset misappropriation.
- The court ordered Debiex to pay $2,257,337.01 in restitution and a $221,466 civil monetary penalty, and permanently barred it from trading on US CFTC-regulated markets or registering with the Commission.
- Zhang Cheng Yang, who acted as a “money mule,” was ordered to return digital assets (62.94 ETH and 5.70 USDT) to one of the defrauded customers, as he received funds without lawful entitlement and failed to respond to the complaint.
- The scam structure involved “Solicitors” who built false romantic relationships online, “Customer Service” who maintained the illusion of a trading platform, and “Money Mules” who laundered funds.
- The fake trading interfaces presented fabricated account activity and returns, deceiving investors into repeatedly depositing more digital assets.
- The National Futures Association (NFA) has been appointed to monitor and facilitate victim restitution under court supervision.
- The US CFTC Division of Enforcement acknowledged coordination with the FBI’s Phoenix Office and praised internal teams for effective cross-border enforcement.
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US CFTC DMO & DCO Withdraws its 2018 Advisory with Respect to Virtual Currency Derivative Product Listings
On 28 March 2025, the United States Commodity Futures Trading Commission (US CFTC) announced the formal withdrawal of Staff Advisory No. 18-14, titled Advisory with Respect to Virtual Currency Derivative Product Listings, which provided regulatory guidance on virtual currency derivative product listings. The decision, set out in CFTC Letter No. 25-07, issued on 27 March 2025, titled ‘Withdrawal of CFTC Staff Advisory No. 18-14 with Respect to Virtual Currency Derivative Product Listings’ withdraws the abovementioned advisory effective immediately.
- The original 2018 Advisory outlined review expectations for new virtual currency derivatives listed by Designated Contract Markets (DCMs), Swap Execution Facilities (SEFs), and Derivatives Clearing Organizations (DCOs).
- The US SEC’s Division of Market Oversight (DMO) and Division of Clearing and Risk (DCR) now consider the guidance obsolete, citing substantial market growth and improved internal regulatory experience.
- Since 2018, Bitcoin futures markets have shown over 300% growth in daily trading volumes and an 800% increase in aggregate open interest, signalling higher liquidity and market resilience.
- The withdrawal does not waive or alter existing compliance requirements under the United States Commodity Exchange Act and US CFTC regulations. DCMs, SEFs, and DCOs must continue to ensure products are not prone to manipulation and uphold robust surveillance and settlement integrity.
- Market participants remain subject to Large Trader Reporting obligations under US CFTC Regulation 15.03(b), with daily reporting thresholds for positions.
- This withdrawal represents the views of DMO and DCR staff, not the full Commission. It reinforces the ongoing shift toward principles-based oversight tailored to current market maturity.
- Regulated entities are encouraged to maintain communication with US CFTC staff when considering new virtual currency derivative products, especially in the context of Crypto Task Force regulatory developments.
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Rahul Varma Appointed Acting Director of US CFTC’s Division of Market Oversight
On 2 April 2025, the United States Commodity Futures Trading Commission (US CFTC) appointed Rahul Varma as the Acting Director of its Division of Market Oversight (DMO), bringing over a decade of regulatory experience and cross-sectoral market intelligence leadership to one of the Commission’s most critical functions. His appointment comes at a pivotal time for global commodity and derivatives markets, as regulatory scrutiny intensifies amid inflationary and geopolitical uncertainties.
- Rahul Varma joined the US CFTC in 2013 as Associate Director for Market Surveillance in the DMO, overseeing commodity sectors including energy, metals, agriculture, and softs.
- In 2017, he was instrumental in establishing the Market Intelligence Branch and later served as Acting Deputy Director.
- In 2024, he became Deputy Director, consolidating the Market Intelligence and Product Review branches to streamline oversight across analytics, innovation, and policy.
- Prior to the CFTC, Varma worked in private-sector risk consulting and at the Federal Energy Regulatory Commission (FERC) in its predecessor enforcement unit.
- He holds degrees from IIT Delhi (BTech), Case Western Reserve University (Master’s), and an MBA from George Washington University, bringing a robust technical and policy background to the role.
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US SEC Publishes Texas Stock Exchange Application for National Securities Exchange Status
On 4 April 2025, the United States Securities and Exchange Commission (US SEC) formally published a notice notifying the receipt and commencing the review of an application by Texas Stock Exchange LLC’s (TXSE) application for registration as a national securities exchange under Section 6 of the United States Securities Exchange Act of 1934. The application is documented under US SEC Release No. 34-102773; File No. 10-249.
- TXSE filed its original Form 1 on 31 January 2025 and submitted Amendment No. 1 on 2 April 2025 to update exhibits and operational details.
- The application outlines a fully electronic limit order book model with no physical trading floor, prioritising simplicity and restricting the use of complex order types.
- Membership is open to registered broker-dealers, with optional market maker designation subject to defined obligations in the TXSE Rulebook.
- TXSE will be a wholly owned subsidiary of TXSE Group Inc., governed by a Stockholders’ Agreement that imposes a 40% beneficial ownership cap per shareholder or group, and a 20% cap for exchange members.
- The US SEC’s Division of Trading and Markets is reviewing whether TXSE meets all statutory and regulatory requirements for national securities exchange status under the United States Exchange Act.
- Public comments must be submitted within 45 days of publication in the Federal Register, via the US SEC’s online portal, email (referencing File No. 10-249), or by mail to the Commission Secretary.
- All filings, including governing documents and ownership disclosures, are available on the US SEC website and in the Public Reference Room.
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US SEC notifies the Agenda for Roundtable on Tailoring Crypto Trading Regulation on 11 April 2025
On 7 April 2025, the United States Securities and Exchange Commission (US SEC) released the official agenda for its forthcoming roundtable, “Between a Block and a Hard Place: Tailoring Regulation for Crypto Trading” scheduled for 11 April 2025 at the US SEC’s Washington, D.C. headquarters. The roundatable is organised under the aegis of the newly formed US Crypto Task Force and this session forms part of the ongoing “Spring Sprint Toward Crypto Clarity” initiative and aims to address structural and compliance challenges in crypto asset trading.
- The roundtable will be held from 1:00 p.m. to 5:00 p.m. EDT, with public access available via livestream on www.sec.gov and in-person attendance subject to advance registration.
- Opening Speech will be delivered by Richard Gabbert, Chief of Staff of the Crypto Task Force, followed by contributions from Acting Chairman Mark T. Uyeda and Commissioners Caroline A. Crenshaw and Hester M. Peirce.
- The main discussion, moderated by Nicholas Losurdo of Goodwin Procter LLP, will include insights from a cross-section of industry stakeholders including Tyler Gellasch (Healthy Markets Association), Jon Herrick (NYSE), Katherine Minarik (Uniswap Labs), Gregory Tusar (Coinbase), and others.
- The panel will focus on tailoring crypto regulations to ensure alignment with market innovation, investor protection, and effective oversight, in light of challenges posed by decentralised finance and digital asset exchanges.
- The concluding session, titled “Regulatory Direction Discussion,” from 3:30 p.m. to 5:00 p.m., will delve into strategic oversight models and the feasibility of rule-based frameworks within the current legislative landscape.
- Questions and suggestions may be submitted in real time via email to crypto@sec.gov or in person using note cards provided at the venue.
- Commissioner Hester M. Peirce reiterated the US SEC’s commitment to transparency and stakeholder engagement, noting the roundtable as an essential step in crafting “a clear, sensible, and fair path forward for the crypto industry.”
- The Crypto roundtable is a series of expert dialogues curated by the US SEC’s Crypto Task Force to inform the development of an inclusive, compliance-oriented regulatory architecture for digital assets.
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