On 27 September 2024, the United States’ Commodity Futures Trading Commission (US CFTC) filed a civil enforcement action in the U.S. District Court for the Western District of Washington against Aipu Limited, Fidefx Investments Limited, Qian Bai, Lan Bai, and Chao Li. The CFTC’s complaint alleges that, beginning on or around 6 February 2023, the defendants fraudulently solicited and misappropriated at least US $3.6 million from 32 customers through a fraudulent investment scheme. The defendants are accused of falsely offering trading in leveraged commodity and forex contracts, misappropriating customer funds, and presenting fabricated account statements through a network of fake platforms, websites, and solicitors. The fraudulent activity primarily targeted Asian American customers in the U.S., with the defendants claiming to provide high-yield returns from trading commodities and foreign currencies.
The facts of the case reveal that the defendants operated through their companies, Aipu Limited and Fidefx Investments Limited, under a common enterprise. Customers were approached via social media platforms such as WeChat, WhatsApp, and Line, where solicitors working on behalf of the defendants claimed to possess insider knowledge or specialized trading expertise that guaranteed profits of up to 30% per trade. Victims were encouraged to fund trading accounts with fiat or digital currency through the companies’ websites, www.aipufx.com and www.fidefxltd.com. However, the CFTC’s investigation uncovered that neither Aipu nor Fidefx had any legitimate trading accounts, and no actual trading took place on behalf of customers. Instead, the customer funds were immediately transferred to offshore accounts controlled by the defendants, where they were misappropriated.
The legal issues revolve around allegations of fraud and misappropriation under the United States’ Commodity Exchange Act (CEA) and related US CFTC regulations. The complaint identifies violations of Sections 4b(a)(2)(A)-(C) of the CEA, which prohibit fraudulent and deceptive practices in connection with commodity trading. Additionally, the defendants are alleged to have violated Section 6(c)(1), which makes it unlawful to engage in manipulative or deceptive schemes concerning commodity futures contracts and retail forex transactions. Furthermore, the defendants did not register with the CFTC as required, nor did they use regulated futures commission merchants (FCMs) or retail foreign currency dealers to process customer transactions, in violation of US CFTC regulations 5.2(b)(1) and 180.1(a)(1)-(3).
The order seeks relief, including restitution for the defrauded customers, disgorgement of ill-gotten gains, and civil monetary penalties. The US CFTC is also seeking a permanent injunction to prevent further violations of the CEA by the defendants, along with trading bans to ensure the individuals and companies involved are prohibited from engaging in future commodity-related activities. The CFTC has highlighted the global nature of this fraudulent enterprise, noting that the funds were transferred to offshore entities with no connection to legitimate trading activities. The enforcement action, coordinated with international regulators and financial institutions, underscores the need for vigilance in cross-border financial fraud cases and the importance of protecting U.S. consumers from schemes involving offshore entities.
The use of digital assets and international financial networks in this case illustrates the complexity of modern financial fraud and the necessity of regulatory enforcement to maintain the integrity of the markets.
(Source: https://www.cftc.gov/PressRoom/PressReleases/8987-24, https://www.cftc.gov/media/11366/enfaipulimitedcomplaint092724/download)
