The Commodity Futures Trading Commission today filed a civil enforcement action in the U.S. District Court for the Western District of Washington against Aipu Limited, Qian Bai, and Lan Bai, together with Fidefx Investments Limited and Chao Li.
The complaint alleges from approximately Feb. 6, 2023 to the present, Bai and Lan Bai, individually and as controlling persons of Aipu, with Fidefx and Li, acting as a common enterprise, fraudulently solicited and misappropriated at least $3.6 million from at least 32 customers as part of a fraudulent investment scheme. The defendants have and continue to solicit and accept assets – fiat currency and digital assets – from customers for the sale of agreements; contracts or transactions in commodities on a leveraged or margined basis or financed by the offeror counterparty or a person acting in concert with the offeror or counterparty on a similar basis; off-exchange retail foreign currency contracts and commodity futures contracts.
The CFTC seeks restitution to defrauded customers, disgorgement of ill-gotten gains, civil monetary penalties, trading bans, and a permanent injunction against further violations of the Commodity Exchange Act (CEA) and CFTC regulations.
Case Background
As alleged in the complaint, the fraudulent common enterprise follows a similar pattern with customers either directly funding a purported “trading account” with Aipu or Fidefx via their respective websites, or agreeing to trade commodity interests via Aipu and/or Fidefx after being contacted by individuals (solicitors) acting on behalf of the defendants. The websites are identical but operating under different names. Aipu and Fidefx operated similar schemes where solicitors contact the customers via computer and cell phone applications such as WeChat, WhatsApp, and Line, or other social media platforms. The solicitors claim to have knowledge or inside information that earns them 10% to 30% profits per trade trading in commodity interests such as leveraged or margined retail commodity transactions, retail forex, and/or commodity futures contracts. The solicitors offer to share their knowledge or inside information with customers and to help them trade by providing particularized trading advice. After an account is funded, customers are provided access to online account statements that show purported deposits into their trading accounts and profitable trading at Aipu or Fidefx.
These account statements are false. Neither Aipu nor Fidefx have any trading accounts in the United States to which customer funds are sent. No trading takes place on behalf of customers at either Aipu or Fidefx. The defendants do not have any commodity interest trading accounts; fail to use customer assets to margin, guarantee or secure trades on behalf of defrauded customers; and misappropriate all assets they accepted and continue to accept from customers. They immediately transfer assets to offshore entities with no connection to commodity trading.
Throughout the relevant period, to fund customers' purported commodity trading accounts, the defendants worked with solicitors as a common enterprise. They directed customers to transfer their fiat and digital assets through a series of bank accounts and private digital wallets affiliated with the defendants. None of these accounts are held or controlled by a CFTC-registered futures commission merchant or retail foreign currency dealer. Rather than using these assets to trade commodity interests on behalf of customers, the defendants immediately misappropriate customers' assets by transferring them offshore to non-trading accounts controlled by persons located outside of the U.S.
Division of Enforcement staff responsible for this case are George H. Malas, Michael Amakor, Karen Kenmotsu, Timothy J. Mulreany, and Paul Hayeck.
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CFTC’s Fraud Advisory
The CFTC has issued several customer protection Fraud Advisories and Articles, including Avoid Forex, Precious Metals, and Digital Asset Romance Scams, which warns users of online dating and social media platforms about an increase in scams that lure victims into sending their money to fraudulent websites that claim to trade foreign currency exchange (forex) contracts, precious metals contracts, and/or digital assets.
The CFTC also strongly urges the public to verify a company’s registration with the CFTC at NFA BASIC before committing funds. If unregistered, a customer should be wary of providing funds to that entity.
Customers and other individuals can report suspicious activities or information, such as possible violations of commodity trading laws, to the Division of Enforcement via a toll-free hotline 866-FON-CFTC (866-366-2382) or file a tip or complaint online or contact the Whistleblower Office. Whistleblowers are eligible to receive between 10 and 30 percent of the monetary sanctions collected, paid from the Customer Protection Fund financed through monetary sanctions paid to the CFTC by violators of the CEA.
