UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF WISCONSIN

COMMODITY FUTURES TRADING 

COMMISSION, 

Plaintiff,

v. 

KAY YANG, 

AK EQUITY GROUP LLC, and 

XAPPHIRE LLC, 

Defendants,

and 

CHAO YANG,

 Relief Defendant.

Civil Action No. 2:22-cv-00449

COMPLAINT FOR INJUNCTIVE 

AND OTHER EQUITABLE RELIEF 

AND FOR CIVIL MONETARY 

PENALTIES UNDER THE 

COMMODITY EXCHANGE ACT

 

Plaintiff Commodity Futures Trading Commission (“Commission”) alleges as follows:

I. SUMMARY

1. From at least April 2017 through March 2020 (the “Relevant Period”), Kay Yang

(“Yang”), individually and as the founder and chief executive officer of AK Equity Group LLC 

(“AK Equity”) and Xapphire LLC (“Xapphire”) (together, “Defendants”), engaged in a 

fraudulent scheme through which she solicited and received at least $15.7 million from at least 

67 individuals or entities (“Pool Participants”) for pooled investment vehicles that purported to 

trade off-exchange leveraged or margined foreign currency (“forex”) contracts. 

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2. In soliciting prospective Pool Participants to deposit investment funds, Defendants

falsely represented that: (1) Defendants successfully managed hundreds of millions of dollars in 

a variety of investment vehicles; (2) Defendants consistently achieved positive monthly returns; 

(3) 100% of Pool Participants’ funds would be allocated to forex trading; and (4) Defendants 

would adhere to a trading strategy that included low leverage ratios and moderate trading 

frequencies. Defendants made these false representations orally and via email messages, text

messages, instant messages, and other documents. 

3. In soliciting funds from existing and prospective Pool Participants, Defendants 

omitted material facts, including that they routinely suffered trading losses, misappropriated Pool 

Participants’ funds, and were not registered with the Commission. 

4. To conceal and perpetuate their fraud, Defendants provided false account updates to 

Pool Participants that reflected the promised positive returns from Defendants’ purported 

successful forex trading. The false account updates concealed Defendants’ misappropriation, 

lack of trading, and trading losses. These updates were provided via email, text message, and an 

online client portal.

5. Finally, Defendants misappropriated Pool Participants’ funds by, among other 

things, comingling Pool Participants’ investment funds with Defendants’ funds, paying for 

personal expenses of Yang and her family, transferring a large portion of the funds to Yang’s 

husband, Chao Yang (“Relief Defendant”), and failing to return funds to Pool Participants when 

requested. As a result of Defendants’ fraud and misappropriation, Pool Participants have lost 

most, if not all, of their funds. 

6. By virtue of this conduct, and as more fully set forth below, Defendants have 

engaged, are engaging, and/or are about to engage in acts and practices in violation of Sections 

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4b(a)(2)(A)-(C) and 4o(1)of the Commodity Exchange Act (“Act”), 7 U.S.C. §§ 6b(a)(2)(A)-(C), 

6o(1), and Commission Regulations (“Regulations”) 4.41(a) and 5.2(b), 17 C.F.R. §§ 4.41(a), 

5.2(b) (2021). 

7. Additionally, during the Relevant Period, AK Equity and Xapphire, through Yang, 

each acted as a commodity pool operator (“CPO”) by soliciting and accepting funds for a pooled 

investment vehicle that is not an eligible contract participant (“ECP”), and that engaged in retail 

forex transactions, without being registered with the Commission as a CPO, as required by the 

Act and Regulations. AK Equity’s and Xapphire’s respective failures to register as a CPO 

violate Sections 2(c)(2)(C)(iii)(I)(cc) and 4m(1) of the Act, 7 U.S.C. §§ 2(c)(2)(C)(iii)(I)(cc), 

6m(1), and Regulation 5.3(a)(2)(i), 17 C.F.R. § 5.3(a)(2)(i) (2021). 

8. Similarly, Yang solicited funds for participation in these pooled investment vehicles 

trading forex contracts, while associated with AK Equity and Xapphire as an officer, employee, 

or agent without being registered with the Commission as an associated person (“AP”) of AK 

Equity and Xapphire, as required by the Act and Regulations. Yang’s failure to register as an AP 

of a CPO violates Sections 2(c)(2)(C)(iii)(I)(cc) and 4k(2) of the Act, 7 U.S.C. §§ 

2(c)(2)(C)(iii)(I)(cc), 6k(2), and Regulations 3.12 and 5.3(a)(2)(ii), 17 C.F.R. §§ 3.12, 

5.3(a)(2)(ii) (2021).

9. Relief Defendant Chao Yang is not charged with violations of the Act. However, he 

received funds from Defendants in which he had no legitimate interest or entitlement and which 

were derived from Defendants’ fraudulent acts. Chao Yang, therefore, must return and repay 

these funds. 

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10. Unless restrained and enjoined by this Court, Defendants are likely to continue to 

engage in the acts and practices alleged in this Complaint or in similar acts and practices, as 

described more fully below. 

11. Accordingly, pursuant to Section 6c of the Act, 7 U.S.C. § 13a-1, the Commission 

brings this action to enjoin Defendants’ unlawful acts and practices and to compel compliance 

with the Act, as amended, and Regulations. In addition, the Commission seeks civil monetary 

penalties and remedial ancillary relief, including, but not limited to, trading and registration bans, 

restitution, disgorgement, rescission, pre- and post-judgment interest, and such other relief as the 

Court may deem necessary and appropriate. 

II. JURISDICTION AND VENUE

12. Jurisdiction. This Court possesses jurisdiction over this action pursuant to 28 U.S.C. 

§ 1331 (codifying federal question jurisdiction) and 28 U.S.C. § 1345 (providing that U.S. 

district courts have original jurisdiction over civil actions commenced by the United States or by 

any agency expressly authorized to sue by Act of Congress). In addition, Section 6c of the Act, 

7 U.S.C. § 13a-1, provides that the Commission may bring actions for injunctive relief or to 

enforce compliance with the Act in the proper district court of the United States whenever it shall 

appear to the Commission that such person has engaged, is engaging, or is about to engage in 

any act or practice constituting a violation of any provision of the Act or any rule, regulation, or 

order thereunder. 

13. The Commission has jurisdiction over the forex solicitations and transactions at issue 

in this case pursuant to Section 2(c)(2)(C) of the Act, 7 U.S.C. § 2(c)(2)(C).

14. Venue. Venue lies properly in this District pursuant to Section 6c(e) of the Act, 7 

U.S.C. § 13a-1(e), because the Defendants transacted business in the Eastern District of 

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Wisconsin, one or more of the victims resides in this District, and some of the Defendants’ acts 

and practices in violation of the Act and Regulations occurred within this District.

III. THE PARTIES

15. Plaintiff Commodity Futures Trading Commission is an independent federal 

regulatory agency charged by Congress with the administration and enforcement of the Act and 

the Regulations promulgated thereunder. The Commission maintains its principal office at 1155 

21st Street NW, Washington, DC 20581. 

16. Defendant Kay Yang is the founder and chief executive officer of Defendants AK 

Equity and Xapphire. Upon information and belief, Yang resides in Mequon, Wisconsin. Yang 

has never been registered with the Commission. 

17. Defendant AK Equity is a Delaware limited liability company formed by Yang on 

March 28, 2017, with a registered office in Dover, Delaware. Upon information and belief, AK 

Equity’s principal place of business is in Mequon, Wisconsin. Yang, as the founder and chief 

executive officer of AK Equity, controls its day-to-day operations, finances, accounts, and books 

and records. AK Equity has never been registered with the Commission. 

18. Defendant Xapphire is a Delaware limited liability company formed by Yang on 

December 19, 2018, with a registered office in Dover, Delaware. Upon information and belief, 

Xapphire’s principal place of business is in Mequon, Wisconsin. Xapphire is the managing 

member of various entities that purportedly invested in forex and other products, including AK 

Equity and Xapphire Fund LLC (“Xapphire Fund”). Yang, as the founder and chief executive 

officer of Xapphire, controls its day-to-day operations, finances, accounts, and books and 

records. Xaphhire has never been registered with the Commission. 

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19. Relief Defendant Chao Yang is an individual who resides in Mequon, Wisconsin and 

is the husband of Defendant Kay Yang. He has never been registered with the Commission in 

any capacity.

IV. FACTS

A. Formation of the Commodity Pools and Solicitation of Pool Participants

20. During the Relevant Period, Yang, as the founder and chief executive officer of AK 

Equity and Xapphire, solicited and pooled at least $15.7 million from at least 67 Pool 

Participants, in connection with the trading of forex contracts. 

21. In March 2017, Yang founded Defendant AK Equity, which she described in a 

promotional brochure as “an established trade manager with a global client base.” In December 

2018, Yang founded Defendant Xapphire, which she described in a promotional brochure as a 

“fund management company” that oversees Defendant AK Equity, Xapphire Fund, and other 

purported investment vehicles operated by Defendants. Yang solicited Pool Participants to 

invest in forex through both AK Equity and Xapphire. 

22. Prospective Pool Participants were introduced to Yang by family members, friends, 

or acquaintances. Most Pool Participants were members of the local Hmong community in 

Wisconsin. 

23. Following an introduction, Yang communicated directly with existing and 

prospective Pool Participants in person or via telephone, email, social media message, and text 

message. In communications with prospective Pool Participants, Yang touted her purported 

forex trading expertise and successful track record, promised substantial returns, and minimized 

the risk of loss. Yang told some prospective Pool Participants that their funds would be pooled 

with the funds of other participants. 

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24. Pool Participants entered into “customer account agreements” with AK Equity and/or 

“subscription agreements” with Xapphire on behalf of Xapphire Fund (collectively, the 

“Customer Agreements”). Yang signed the Customer Agreements on behalf of either AK Equity 

or Xapphire. 

25. At the direction of Yang, Pool Participants deposited their investment funds, 

primarily via wire transfer, into various bank accounts in the name of, or controlled by, Yang, 

AK Equity, and/or Xapphire. 

26. In January 2019, Yang began transferring existing client accounts from AK Equity to 

Xapphire. By April 2019, all trading activity conducted on behalf of the Pool Participants was 

executed in forex trading firm accounts in the name of Xapphire. 

27. At least one Pool Participant was not an ECP and the commodity pools operated by 

Defendants were not ECPs, as that term is defined in Section 1a(18) of the Act, 7 U.S.C. § 

1a(18). 

28. On May 10, 2018, Yang filed a Notice of Claim of Exemption from Commodity 

Trading Advisor Registration with the National Futures Association (“NFA”), pursuant to 

Regulation 4.14(a)(8), 17 C.F.R. § 4.14(a)(8) (2021) on behalf of AK Equity. The exemption 

notice was withdrawn the following day, on May 11, 2018. 

29. On March 21, 2019, Yang filed a Notice of Claim of Exemption from Commodity 

Pool Operator Registration with the NFA, pursuant to Regulation 4.13(a)(2), 17 C.F.R. § 

4.13(a)(2) (2021), on behalf of Xapphire for Xapphire Fund. On August 26, 2019, Xapphire 

exceeded the total participant and total gross capital contribution thresholds for the exemption. 

The exemption notice was withdrawn on March 3, 2020. 

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30. On July 13, 2020, the State of Wisconsin Department of Financial Institutions, 

Division of Securities, issued a Final Order by Consent to Cease and Desist, Revoking 

Exemptions, and Imposing Disgorgement, Restitution, and Civil Penalties on Yang in connection 

with her operation of AK Equity and Xapphire (“WDFI Order”). Among other things, the WDFI 

Order required Yang to pay restitution in the amount of $16,950,776.78 to Defendants’ Pool 

Participants, and disgorge $4,231,998.78 in profits. 

31. After the publication of the WDFI Order, Yang attempted to reassure Pool 

Participants that she had not committed any fraud in connection with AK Equity and Xapphire. 

For example, Yang informed at least one Pool Participant that she would send them checks in 

August 2020 to comply with the order of restitution in the WDFI Order. Further, in an apparent 

attempt to circumvent the specific terms of the order of restitution, Yang also informed Pool 

Participants that if they wanted to remain invested in her forex commodity pools, they should 

endorse the restitution checks and return them to Yang without cashing them. 

B. Material Misrepresentations and Omissions to Pool Participants

32. In soliciting funds from existing and prospective Pool Participants during the 

Relevant Period, Yang made material misrepresentations and omissions, orally and in writing, 

regarding the performance of the Pool Participants’ investments and her use of their funds. 

33. For example, in January 2019, Yang met with a prospective Pool Participant (“Pool 

Participant A”) and provided her with the promotional brochure for AK Equity. During this 

meeting, Yang fraudulently misrepresented that she managed hundreds of millions of dollars in 

various types of investments, including some accounts valued at over $100 million. 

34. During another meeting with Pool Participant A, Yang again fraudulently 

misrepresented her assets under management, stating that she managed approximately $700 

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million in investments. She also projected that her fund would exceed $1 billion in assets by the 

end of the year. 

35. In truth, Yang only managed approximately $15.7 million in investments during the 

period April 2017 through March 2020. 

36. Yang also made material misrepresentations regarding AK Equity’s past 

performance. For example, the AK Equity promotional brochure touted the following “Global 

Performance Track Record (2018)”: 

Month Rate of Return

January 6.62%

February 5.81%

March 0.98%

April 8.18%

May 4.07%

June 5.24%

July 8.70%

August 4.17%

The AK Equity promotional brochure also touted the following “2018 AK General 

Profits”:

Month

Total Profits for US Investors

(Closing Profit)

January $291,159.33

February $381,900.72

March $28,694.30

April $289,046.83

May $170,422.81

August $1,172,205.36

The table omitted alleged profits for the months of June and July of 2018. The returns 

represented in these tables were false. In reality, AK Equity suffered substantial trading losses 

during 2018. 

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37. Similarly, in the March 2019 meeting with Pool Participant A, Yang falsely 

stated that AK Equity earned profits of 40 to 50% per year, when in fact AK Equity consistently 

sustained net trading losses from its inception.

38. In an effort to conceal her fraudulent scheme, Yang deflected questions regarding 

the claims in the AK Equity promotional brochure. For example, in an email exchange between 

a potential Pool Participant (“Pool Participant B”) and Yang in January 2019, Pool Participant B 

noted certain inconsistencies in the performance figures in AK Equity’s promotional brochure. 

Yang dismissed these concerns, and then provided Pool Participant B with a purported account 

statement for one of AK Equity’s other Pool Participants, noting that the supposed Pool 

Participant account had appreciated in value from $250,000 to $6.8 million between February 

2015 and May 2017. 

39. Yang’s statement was false in that any net increase in Yang’s assets under 

management was not attributable to Defendants’ trading gains. Rather, it was due to soliciting 

additional investments from unsuspecting Pool Participants. From inception to January 2019, 

Defendants’ trading activity resulted in net trading losses. 

40. Yang also made material misrepresentations to potential Pool Participants about 

Xapphire’s past performance. For example, Yang provided Pool Participant A with a 

promotional brochure for Xapphire that claimed that Xapphire’s “U.S. Clients” had positive 

average monthly investment returns, and annual investment returns ranging from 20% to 40%. 

However, these representations of Xapphire’s supposed successful track record were for the 

period of January 2018 through December 2018, almost one year before Xapphire was formed. 

Xapphire’s trading activity did not commence until May 2019. 

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41. Yang also made misrepresentations about the allocation of Pool Participants’ 

investments. For example, the AK Equity promotional brochure which Yang provided to Pool 

Participant A stated that 100% of Pool Participants’ investments of less than $5 million would be 

allocated to forex trading. However, of the approximately $11.9 million in net deposits that Pool 

Participants made in AK Equity only approximately $3.2 million was allocated to forex trading. 

As discussed further below, the remaining funds were either held in cash or spent by Yang on 

various personal expenses. 

42. Yang failed to disclose to Pool Participants that AK Equity and Xapphire suffered 

trading losses and the extent of those losses. Specifically, AK Equity and Xapphire traded 

approximately $7.1 million of Pool Participant funds and suffered net trading losses of 

approximately $2.9 million (excluding commissions and fees paid to forex firms). Yang did not 

disclose that Pool Participants’ investments suffered net losses. 

43. Yang also made misrepresentations about Xapphire’s trading strategy. For example, 

one of Xapphire’s promotional brochures, provided to Pool Participants, states that it maintained 

a “[l]ow leverage (1:20 1:50)” trading strategy and traded with “[m]oderate frequency (weekly – 

monthly).” In fact, at least one of Xapphire’s forex firm account statements indicated that the 

account maintained a 1:100 leverage ratio and often executed multiple transactions per day. 

44. During the Relevant Period, Yang, both orally and in written account updates, 

periodically represented to Pool Participants that their investments had increased in value due to 

AK Equity’s and Xapphire’s successful forex trading, when in fact, these entities suffered 

substantial trading losses during most months. 

45. For example, on June 30, 2017, Yang sent an account update via email to a Pool 

Participant (“Pool Participant C”) purporting to show monthly performance figures. Yang wrote

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that “we have about a good ~$21k in profit that we are looking to close[,]” and that “[i]f you do 

not with [sic] to take a draw at the moment, the profits will roll over into the next month...” In 

reality, AK Equity’s forex firm account statements indicate that trading did not commence until 

August 2017, therefore the AK Equity account could not have realized any of the trading gains 

Yang reported to pool participants. Furthermore, the AK Equity forex firm account statements 

indicate that once it did begin trading in August 2017, suffered net trading losses of 

approximately $150,000 during the period of August 2017 through December 2017. 

46. Yang also made misrepresentations about Pool Participants’ ability to withdraw funds 

from their accounts. For example, the AK Equity Customer Agreements state that “Upon request 

of account holder written and signed and communicated to AK EQUITY GROUP LLC either by 

fax, email, or any other kind of communication, the company will proceed to liquidate and 

withdraw the funds from our prime institutional LP (liquidity provider), the funds should be 

available within 5-7 working days following the closure of all/any open trades, AK EQUITY 

GROUP LLC will immediately proceed to transfer the fund [sic] to the investor’s bank account. 

The process may take an additional 2-5 working [sic] from the date of closing the account.” 

47. Contrary to these representations, Yang failed to honor Pool Participants’ withdrawal 

requests. For example, Pool Participant A requested a withdrawal of funds on July 27, 2020. 

Between July 2020 and November 2020, Pool Participant A contacted Yang approximately 

twenty-two times via text message regarding the status of their withdrawal request. Yang 

provided a series of excuses for her failure to honor the withdrawal request, including alleged 

delays caused by her legal and compliance team, regulators, market conditions, bank holidays, 

and unresponsiveness of overseas banks and brokers. To date, Pool Participant A has yet to 

receive those requested funds. 

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48. Yang failed to disclose to Pool Participants that AK Equity and Xapphire suffered 

trading losses or the extent of those losses. She also failed to disclose that, rather than trade 

forex, she misappropriated Pool Participant funds to pay for personal expenses such as vacations, 

gambling casino visits, car payments and shopping. 

C. Funding, Trading and Misappropriation of Funds

49. During the Relevant Period, Defendants solicited at least 67 Pool Participants to

invest at least $15.7 million. These funds were held in bank accounts in the names of AK Equity 

and Xapphire. 

50. Although Defendants had sporadic profitable trading months, their overall trading 

activity resulted in net losses that contradict the false statements and performance figures that 

Yang provided to prospective and existing Pool Participants. Specifically, from April 2017 to 

March 2020, Defendants opened trading accounts with at least five forex trading firms. Of the 

approximate $15.7 million that Defendants collected from Pool Participants, only approximately 

$7.1 million was deposited into those trading accounts. Further, the trading activity in those 

accounts resulted in net trading losses of at least $2.9 million. The table below illustrates 

Defendants’ deposits and trading losses in each of those accounts during the Relevant Period. 

Forex Trading Firm Deposits Profits (Losses)

Forex Firm A $1,399.980.00 ($609,833.02)

Forex Firm B $760,000.00 ($125,590.51)

Forex Firm C $100,000.00 ($2,245.13)

Forex Firm D $1,700,000.00 ($81,191.20

Forex Firm E $3,135,000.00 ($2,120,996.36)

Total: $7,094,980.00 ($2,939,856.22)

51. After accounting for those trading losses, and approximately $300,000 in 

commissions and fees paid to the forex firms, Defendants held approximately $12.4 million in 

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Pool Participants’ remaining funds in banking or trading accounts. Of those remaining funds, 

Defendants only returned approximately $2 million to Pool Participants. 

52. By contrast, Defendants spent approximately $4.8 million of the remaining funds on 

Yang’s personal expenses. For example, bank records indicate that Yang spent over $700,000 at 

casinos and on gambling-related purchases, approximately $439,000 on travel and luxury hotels, 

and approximately $248,000 on cars and car-related expenses. Furthermore, Yang made net 

transfers of approximately $200,000 to bank accounts in her name, approximately $1.4 million to 

bank accounts in the name of her husband, Relief Defendant Chao Yang, and approximately $1 

million to joint bank accounts shared with her husband. 

53. Even when accounting for purported performance and management fees, Yang 

misappropriated at least $4 million of Pool Participants’ funds. 

54. At all relevant times, Yang was a signatory on AK Equity’s and Xapphire’s bank 

accounts, with certain members of Yang’s immediate family acting as account co-signers. Yang 

had full access and was authorized to trade in the forex trading firm accounts. Accordingly, at 

all relevant times Yang had personal knowledge of the total amount of funds transferred to her 

from Pool Participants, the disposition of those funds, the trades effected in the forex trading 

firm accounts, and the performance of those trades. 

V. STATUTORY AND REGULATORY VIOLATIONS

COUNT ONE

FRAUD IN CONNECTION WITH FOREX CONTRACTS

Violations of Sections 4b(a)(2)(A)-(C) of the Act and CFTC Regulation 5.2(b) 

55. The allegations set forth in the foregoing paragraphs are re-alleged and incorporated 

herein by reference. 

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56. Section 4b(a)(2)(A)-(C) of the Act, 7 U.S.C. § 6b(a)(2)(A)-(C), makes it unlawful: 

for any person, in or in connection with any order to make, or the 

making of, any contract of sale of any commodity for future 

delivery, or swap, that is made, or to be made, for or on behalf of, 

or with, any other person other than on or subject to the rules of a 

designated contract market—(A) to cheat or defraud or attempt to 

cheat or defraud the other person; (B) willfully to make or cause to 

be made to the other person any false report or statement or willfully 

to enter or cause to be entered for the other person any false record; 

[or] (C) willfully to deceive or attempt to deceive the other person 

by any means whatsoever in regard to any order or contract or the 

disposition or execution of any order or contract, or in regard to any 

act of agency performed, with respect to any order or contract for 

or, in the case of paragraph (2), with the other person.” 

57. Section 2(c)(2)(C) of the Act, 7 U.S.C. § 2(c)(2)(C) 2018), among other things, 

contains three grants which make clear that the CFTC has jurisdiction over, and that certain 

antifraud provisions in the Act apply to, retail forex: 

a. Pursuant to 7 U.S.C. § 2(c)(2)(C)(ii)(I), forex agreements, contracts, or transactions 

described in 7 U.S.C. § 2(c)(2)(C)(i) “shall be subject to” the antifraud provisions of 7 

U.S.C. §§ 6b and 6o, among other Sections of the Act; 

b. Pursuant to 7 U.S.C. § 2(c)(2)(C)(iv), 7 U.S.C. § 6b “shall apply to” the forex 

agreements, contracts, or transactions described in 7 U.S.C. § 2(c)(2)(C)(i) “as if” they 

were a contract of sale of a commodity for future delivery; and 

c. Pursuant to 7 U.S.C. § 2(c)(2)(C)(vii), “[t]his Act applies to, and the Commission shall 

have jurisdiction over an account or pooled investment vehicle that is offered for the 

purpose of trading, or that trades,” forex agreements, contracts, or transactions described 

in 7 U.S.C. § 2(c)(2)(C)(i). 

58. Regulation 5.2(b), 17 C.F.R. § 5.2(b) (2021), makes it unlawful:

for any person, by use of the mails or by any means or 

instrumentality of interstate commerce, directly or indirectly, in or 

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in connection with any retail forex transaction: (1) To cheat or 

defraud or attempt to cheat or defraud any person; (2) Willfully to 

make or cause to be made to any person any false report or statement 

or cause to be entered for any person any false record; or (3) 

Willfully to deceive or attempt to deceive any person by any means 

whatsoever.

59. As described herein, Defendants violated Section 4b(a)(2)(A)-(C) of the Act, 7 U.S.C. 

§ 6b(a)(2)(A)-(C), and Regulation 5.2(b), 17 C.F.R. § 5.2(b) (2021), by cheating or defrauding, 

or attempting to cheat or defraud, other persons; issuing or causing to be issued false statements 

and records; and willfully deceiving or attempting to deceive other persons in connection with 

the offering of, or entering into, the forex transactions alleged herein, by, among other things: (i) 

fraudulently soliciting Pool Participants and prospective Pool Participants by making material 

misrepresentations and omissions about Defendants’ forex trading track record registration 

status; (ii) misappropriating Pool Participants’ funds; and (iii) fabricating false records and 

account statements. 

60. Defendants engaged in the acts and practices described above using instrumentalities 

of interstate commerce, including but not limited to: the use of interstate wires for transfer of 

funds, e-mail, websites, and other electronic communication devices. 

61. Defendants engaged in the acts and practices described above knowingly, willfully, or 

with reckless disregard for the truth. 

62. Yang acted within the course and scope of her employment, agency, or office with 

AK Equity and Xapphire. Pursuant to Section 2(a)(1)(B) of the Act, 7 U.S.C. § 2(a)(1)(B), and 

Regulation 1.2, 17 C.F.R. § 1.2 (2021), AK Equity and Xapphire are liable as principals for 

Yang’s violations of Section 4b(a) (2)(A)-(C) of the Act, 7 U.S.C. § 6b(a)(2)(A)-(C), and 

Regulation 5.2(b), 17 C.F.R. § 5.2(b) (2021). 

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63. Yang controlled AK Equity and Xapphire, directly or indirectly, and did not act in 

good faith or knowingly induced, directly or indirectly, AK Equity and Xapphire to commit the 

acts and/or omissions alleged herein. Therefore, pursuant to Section 13(b) of the Act, 7 U.S.C. § 

13c(b), Yang is liable for AK Equity’s and Xapphire’s violations of Section 4b(a)(2)(A)-(C) of 

the Act, 7 U.S.C. § 6b(a)(2)(A)-(C), and Regulation 5.2(b), 17 C.F.R. § 5.2(b) (2021). 

64. Each act of fraudulent solicitation, misappropriation, and false statement or report, 

including but not limited to those specifically alleged herein, is alleged as separate and distinct 

violations of Section 4b(a)(2)(A)-(C) of the Act, 7 U.S.C. § 6b(a)(2)(A)-(C), and Regulation 

5.2(b), 17 C.F.R. § 5.2(b) (2021). 

COUNT TWO 

FRAUD BY A COMMODITY POOL OPERATOR 

AND ASSOCIATED PERSON OF A COMMODITY POOL OPERATOR 

Violations of Section 4o(1) of the Act and Regulation 4.41(a)

65. The allegations set forth in the preceding paragraphs are re-alleged and incorporated 

herein by reference.

66. Section 4o(1) of the Act, 7 U.S.C. § 6o(1), makes it unlawful for a CPO or AP of a 

CPO: 

by use of the mails or any other means or instrumentality of 

interstate commerce, directly or indirectly – (A) to employ any 

device, scheme, or artifice to defraud any client or participant or 

prospective client or participant; or (B) to engage in any transaction, 

practice, or course of business which operates as a fraud or deceit 

upon any client or participant or prospective client or participant. 

67. Regulation 5.4, 17 C.F.R. § 5.4 (2021), states that Part 4 of the Regulations, 17 C.F.R. 

pt. 4 (2021), applies to any person required to register as a CPO pursuant to Part 5 of the 

Regulations related to off-exchange forex transactions, 17 C.F.R. pt. 5 (2021).

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68. Regulation 4.41(a), 17 C.F.R. § 4.41(a) (2021), makes it unlawful for any CPO, or 

any principal thereof, to publish, distribute, or broadcast, whether by electronic media or 

otherwise, any report, letter, circular, memorandum, publication, writing, advertisement, or other 

literature or advice that: (1) employs any device, scheme, or artifice to defraud any participant or 

client or prospective participant or client; or (2) involves any transaction, practice, or course of 

business which operates as a fraud or deceit upon any participant or client or any prospective 

participant or client. 

69. As alleged herein, during the Relevant Period, AK Equity and Xapphire, through 

Yang, each acted as a CPO by soliciting, accepting, or receiving funds from the public while 

engaged in a business that is of the nature of an investment trust, syndicate, or similar form of 

enterprise, for the purpose of, among other things, trading forex contracts. 

70. AK Equity and Xapphire, through Yang, each violated Section 4o(1) of the Act, 7 

U.S.C. § 6o(1), and Regulation 4.41(a), 17 C.F.R. § 4.41(a) (2021), in that they employed or are 

employing a device, scheme, or artifice to defraud prospective and existing Pool Participants or 

engaged or are engaging in transactions, practices, or a course of business which operated or 

operates as a fraud or deceit upon the Pool Participants or prospective Pool Participants. The 

fraudulent acts include those described in Count One of this Complaint, as set forth above. 

71. The foregoing acts and/or omissions by Yang occurred within the scope of her

employment, office, or agency with AK Equity and Xapphire. Therefore, pursuant to Section 

2(a)(1)(B) of the Act, 7 U.S.C. § 2(a)(1)(B), and Regulation 1.2, 17 C.F.R. § 1.2 (2021), AK 

Equity and Xapphire are liable for Yang’s violations of Section 4o(1) of the Act, 7 U.S.C. § 

6o(1), and Regulation 4.41(a), 17 C.F.R. § 4.41(a) (2021). 

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72. Yang controlled, directly or indirectly, AK Equity and Xapphire, and did not act in 

good faith, or knowingly induced, directly or indirectly, AK Equity and Xapphire to commit the 

acts and/or omissions alleged herein. Therefore, pursuant to Section 13(b) of the Act, 7 U.S.C. § 

13c(b), Yang is liable for AK Equity and Xapphire’s violations of Section 4o(1) of the Act, 7 

U.S.C. § 6o(1), and Regulation 4.41(a), 17 C.F.R. § 4.41(a) (2021). 

73. Each act of fraudulent solicitation, misappropriation, and false statement or report, 

including but not limited to those specifically alleged herein, is alleged as a separate and distinct 

violation of Section 4o(1) of the Act, 7 U.S.C. § 6o(1), and Regulation 4.41(a), 17 C.F.R. § 

4.41(a) (2021). 

COUNT THREE

FAILURE TO REGISTER AS A CPO

Violation of Sections 2(c)(2)(C)(iii)(I)(cc) and 4m(1) of the Act and Regulation 5.3(a)(2)(i) 

74. The allegations set forth in the preceding paragraphs are re-alleged and incorporated 

herein by reference. 

75. Section 2(c)(2)(C)(iii)(I)(cc) of the Act, 7 U.S.C. § 2(c)(2)(C)(iii)(I)(cc), makes it 

unlawful for any person, unless registered in such capacity as the Commission shall determine, to 

operate or solicit funds, securities, or property for any pooled investment vehicle that is not an 

eligible contract participant (as defined by Section 1a(18) of the Act, 7 U.S.C. § 1(18)) in 

connection with agreements, contracts, or transactions described in Section 2(c)(2)(C)(i) of the 

Act, 7 U.S.C. § 2(c)(2)(C)(i) (leveraged or margined forex transactions), entered into with or to 

be entered into with a person who is not described in item (aa), (bb), (ee), or (ff) of Section 

2(c)(2)(B)(i)(II) of the Act, 7 U.S.C. § 2(c)(2)(B)(i)(II) (describing counterparties such as 

registered futures commission merchants). 

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76. Section 4m(1) of the Act, 7 U.S.C. § 6m(1), makes it unlawful for any CPO, unless 

registered with the Commission, to make use of the mails or any means or instrumentality of 

interstate commerce in connection with its business as a CPO.

77. Regulation 5.3(a)(2)(i), 17 C.F.R. § 5.3(a)(2)(i) (2021), requires any CPO engaged in 

retail forex transactions to register with the Commission. Regulation 5.1(d)(1), 17 C.F.R. § 

5.1(d)(1) (2021), defines a CPO as any person who “operates or solicits funds, securities, or 

property for a pooled investment vehicle . . . that engages in retail forex transactions.” 

78. During the Relevant Period, AK Equity and Xapphire each acted as a CPO and made 

use of the mails or one or more means or instrumentalities of interstate commerce in connection 

with its business as a CPO by operating or soliciting funds for a pooled investment vehicle that is 

not an ECP and that engaged in retail forex transactions. AK Equity and Xapphire engaged in 

this conduct without being registered with the Commission in violation of Sections 

2(c)(2)(C)(iii)(I)(cc) and 4m(1) of the Act, 7 U.S.C. §§ 2(c)(2)(C)(iii)(I)(cc), 6m(1), and 

Regulation 5.3(a)(2)(i), 17 C.F.R. § 5.3(a)(2)(i) (2021).

79. The foregoing acts and/or omissions by Yang occurred within the scope of her

employment, office, or agency with AK Equity and Xapphire. Therefore, pursuant to Section 

2(a)(1)(B) of the Act, 7 U.S.C. § 2(a)(1)(B), and Regulation 1.2, 17 C.F.R. § 1.2 (2021), AK 

Equity and Xapphire are each liable for Yang’s acts and/or omissions in violation of Section 

2(c)(2)(C)(iii)(I)(cc) of the Act, 7 U.S.C. § 2(c)(2)(C)(iii)(I)(cc), Section 4m(1) of the Act, 7 

U.S.C. § 6m(1), and Regulation 5.3(a)(2)(i), 17 C.F.R. § 5.3(a)(2)(i) (2021). 

80. Yang controlled AK Equity and Xapphire, directly or indirectly, and did not act in 

good faith and knowingly induced, directly or indirectly, AK Equity and Xapphire to commit the 

acts and/or omissions alleged herein. Therefore, pursuant to Section 13(b) of the Act, 7 U.S.C. § 

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13c(b), Yang is liable for AK Equity’s and Xapphire’s violations of the Act and Regulations, as 

alleged in this count. 

COUNT FOUR

FAILURE TO REGISTER AS AN ASSOCIATED PERSON OF A CPO

Violation of Sections 2(c)(2)(C)(iii)(I)(cc) and 4k(2) of the Act 

and Regulations 3.12 and 5.3(a)(2)(ii) 

81. The allegations set forth in the preceding paragraphs are re-alleged and incorporated 

herein by reference.

82. Section 2(c)(2)(C)(iii)(I)(cc) of the Act, 7 U.S.C. § 2(c)(2)(C)(iii)(I)(cc), prohibits 

any person from operating or soliciting funds, securities, or property for any pooled investment 

vehicle that is not an ECP in connection with agreements, contracts, or transactions in 

forex, unless registered with the Commission, with certain exceptions not applicable to 

Defendants.

83. Section 4k(2) of the Act, 7 U.S.C. § 6k(2), and Regulation 5.3(a)(2)(ii), 17 C.F.R. § 

5.3(a)(2)(ii) (2021), require registration with the Commission for any person who is associated 

with a CPO as a partner, officer, employee, consultant, or agent (or any person occupying a 

similar status or performing similar functions), in any capacity that involves the solicitation of 

funds, securities, or property for participation in a commodity pool or the supervision of any 

person or persons so engaged. 

84. Regulation 3.12, 17 C.F.R. § 3.12 (2021), prohibits any person from being an AP of a 

CPO unless that person is registered with the Commission as an AP of the sponsoring CPO. 

85. Regulation 5.1(d)(2), 17 C.F.R. § 5.1(d)(2) (2021), defines an AP, for purposes of the 

Part 5 of the Regulations relating to forex transactions, as any natural person associated with a 

CPO (as that term is defined in Regulation 5.1(d)(1), 17 C.F.R. § 5.1(d)(1) (2021) as a partner, 

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officer, employee, consultant, or agent that is involved in the solicitation of funds, securities, or 

property, or the supervision of any such person so engaged. 

86. During the Relevant Period, Yang acted as an AP of a CPO by: (i) soliciting funds, 

securities, or property for participation in a commodity pool operated by AK Equity and 

Xapphire, and (ii) operating or soliciting funds, securities, or property for the AK Equity and 

Xapphire pooled investment vehicles, which were not ECPs, in connection with forex 

transactions. Yang engaged in this conduct without being registered with the Commission as an 

AP of CPOs AK Equity and Xapphire, in violation of Sections 2(c)(2)(C)(iii)(I)(cc) and 4k(2) of 

the Act, 7 U.S.C. §§ 2(c)(2)(C)(iii)(I)(cc), 6k(2), and Regulations 3.12 and 5.3(a)(2)(ii), 17 

C.F.R. §§ 3.12, 5.3(a)(2)(ii) (2021). 

87. The foregoing acts by Yang occurred within the scope of her employment, office, or 

agency with AK Equity and Xapphire. Pursuant to Section 2(a)(1)(B) of the Act, 7 U.S.C. § 

2(a)(1)(B), and Regulation 1.2, 17 C.F.R. § 1.2 (2021), AK Equity and Xapphire are each liable 

as principal for Yang’s violations of the Act and Regulations, as alleged in this count. 

COUNT FIVE

DISGORGEMENT OF FUNDS FROM RELIEF DEFENDANT

88. The allegations set forth in the preceding paragraphs are re-alleged and incorporated 

herein by reference.

89. Defendants have defrauded Pool Participants and misappropriated pool funds. 

90. Relief Defendant Chao Yang received funds as a result of the Defendants’ fraudulent 

conduct and misappropriation, and has been unjustly enriched thereby. 

91. Relief Defendant has no legitimate entitlement to or interest in the funds received as a 

result of Defendants’ fraudulent conduct and/or misappropriation. 

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92. Relief Defendant should be required to disgorge funds up to the amount he received 

from Defendants’ fraudulent conduct and misappropriation, or the value of those funds that he 

may have subsequently transferred to third parties. 

VI. RELIEF REQUESTED

WHEREFORE, the Commission respectfully requests that the Court, as authorized by 

Section 6c of the Act, 7 U.S.C. § 13a-1, and pursuant to its own equitable powers: 

A. Find that Defendants violated Section 4b(a)(2)(A)-(C) of the Act, 7 U.S.C. § 

6b(a)(2)(A)-(C), and Regulation 5.2(b), 17 C.F.R. § 5.2(b) (2021), in connection with Count One 

of this Complaint. 

B. Find that Defendants violated Section 4o(1) of the Act, 7 U.S.C. § 6o(1) and 

Regulation 4.41(a), 17 C.F.R. § 4.41(a) (2021), in connection with Count Two of this Complaint. 

C. Find that Defendants violated Section 2(c)(2)(C)(iii)(I)(cc) of the Act, 7 U.S.C. §

2(c)(2)(C)(iii)(I)(cc), Section 4m(1) of the Act, 7 U.S.C. § 6m(1), and Regulation 5.3(a)(2)(i), 17 

C.F.R. § 5.3(a)(2)(i) (2021), in connection with Count Three of this Complaint. 

D. Find that Defendants violated Section 2(c)(2)(C)(iii)(I)(cc) of the Act, 7 U.S.C. § 

2(c)(2)(C)(iii)(I)(cc), Section 4k(2) of the Act, 7 U.S.C. § 6k(2), Regulation 3.12, 17 C.F.R. § 

3.12 (2021), and Regulation 5.3(a)(2)(ii), 17 C.F.R. § 5.3(a)(2)(ii) (2021), in connection with 

Count Four of this Complaint. 

E. Enter an order of permanent injunction enjoining Defendants, and their affiliates, 

agents, servants, employees, successors, assigns, attorneys, and all persons in active concert with 

them, who receive actual notice of such order by personal service or otherwise, from engaging in 

the conduct described above, in violation of Section 2(c)(2)(C)(iii)(I)(cc) of the Act, 7 U.S.C. § 

2(c)(2)(C)(iii)(I)(cc), Section 4b(a)(2)(A)-(C) of the Act, 7 U.S.C. § 6b(a)(2)(A)-(C), Section 

4k(2) of the Act, 7 U.S.C. § 6k(2), Section 4m(1) of the Act, 7 U.S.C. § 6m(1), Section 4o(1) of 

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the Act, 7 U.S.C. § 6o(1), Regulation 3.12, 17 C.F.R. § 3.12 (2021), Regulation 4.41(a), 17 

C.F.R. § 4.41(a) (2021), Regulation 5.2(b), 17 C.F.R. § 5.2(b) (2021), Regulation 5.3(a)(2)(i), 17 

C.F.R. § 5.3(a)(2)(i) (2021), and Regulation 5.3(a)(2)(ii), 17 C.F.R. § 5.3(a)(2)(ii) (2021). 

F. Enter an order of permanent injunction restraining and enjoining Defendants, and 

their affiliates, agents, servants, employees, successors, assigns, attorneys, and all persons in 

active concert with them, from directly or indirectly:

1) Trading on or subject to the rules of any registered entity (as that term is 

defined in Section la(40) of the Act, 7 U.S.C. § 1a(40));

2) Entering into any transactions involving “commodity interests” (as that 

term is defined in Regulation 1.3, 17 C.F.R. § 1.3 (2021)), for accounts 

held in the name of any Defendant or for accounts in which any Defendant 

has a direct or indirect interest;

3) Having any commodity interests traded on any Defendants’ behalf; 

4) Controlling or directing the trading for or on behalf of any other person or 

entity, whether by power of attorney or otherwise, in any account 

involving commodity interests; 

5) Soliciting, receiving, or accepting any funds from any person for the 

purpose of purchasing or selling any commodity interests; 

6) Applying for registration or claiming exemption from registration with the 

Commission in any capacity, and engaging in any activity requiring such 

registration or exemption from registration with the Commission except as 

provided for in Regulation 4.14(a)(9), 17 C.F.R. § 4.14(a)(9) (2021); and

7) Acting as a principal (as that term is defined in Regulation 3.1(a), 17 

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C.F.R. § 3.1(a) (2021), agent, or any other officer or employee of any 

person registered, exempted from registration, or required to be registered 

with the Commission except as provided for in Regulation 4.14(a)(9). 

G. Enter an order directing Defendants, as well as any third-party transferee and/or 

successors thereof, to disgorge, pursuant to such procedure as the Court may order, all benefits 

received including, but not limited to, salaries, commissions, loans, fees, revenues, and trading 

profits derived, directly or indirectly, from acts or practices which constitute violations of the Act 

and Regulations as described herein, including pre-judgment and post-judgment interest. 

H. Enter an order requiring Defendants, as well as any successors thereof, to make 

full restitution to every person who has sustained losses proximately caused by the violations 

described herein, including pre-judgment and post-judgment interest. 

I. Enter an order directing Defendants to pay a civil monetary penalty assessed by 

the Court, in an amount not to exceed the penalty prescribed by Section 6c(d)(1) of the Act, 

7 U.S.C. § 13a-1(d)(1), as adjusted for inflation pursuant to the Federal Civil Penalties Inflation 

Adjustment Act Improvements Act of 2015, Pub. L. 114-74, tit. VII, § 701, 129 Stat. 584, 599–

600, see Regulation 143.8, 17 C.F.R. § 143.8 (2021), for each violation of the Act and 

Regulations, as described herein. 

J. Enter an order directing Defendants and any of their successors, holding 

companies and alter egos, to rescind, pursuant to such procedures as the Court may order, all 

contracts and agreements, whether implied or express, entered into between, with, or among 

Defendants and any of the Pool Participants whose funds were received by Defendants as a result 

of the acts and practices which constituted violations of the Act and the Regulations as described 

herein. 

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K. Enter an order requiring Defendants to pay costs and fees as permitted by 28 

U.S.C. §§ 1920, 2412(a)(2). 

L. Enter an order requiring Relief Defendant to disgorge funds up to the amount he 

received from Defendants’ fraudulent conduct and misappropriation, or the value of those funds 

that he may have subsequently transferred to third parties 

M. Enter an order providing such other and further relief as this Court may deem 

necessary and appropriate under the circumstances. 

Dated: April 13, 2022 Respectfully submitted,

COMMODITY FUTURES TRADING 

COMMISSION

_______________________________________ 

Lauren Bennett, #0812160068 (MD) 

Luke Marsh, #475635 (DC) 

Commodity Futures Trading Commission

Division of Enforcement 

1155 21st Street, N.W. 

Washington D.C. 20581 

(202) 418-5000 

lbennett@cftc.gov

lmarsh@cftc.gov

Attorneys for Plaintiff

 

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