SEC Takes Action Against Pig Butchering Crypto Scams
The U.S. Securities and Exchange Commission (SEC) has launched its first enforcement actions against pig butchering scams, a type of crypto fraud that preys on victims by gaining their trust through social media apps. The fraudsters convince individuals to invest in fake cryptocurrency platforms, only to steal their money once they try to withdraw funds.
SEC Sues Scammers in Two Landmark Cases
On Tuesday, the SEC filed two lawsuits against three individuals and five companies accused of orchestrating these scams. These actions mark the first time the SEC has targeted pig butchering scams in court. According to the lawsuits, the fraudsters used elaborate fake crypto trading platforms to deceive investors.
Pig Butchering Scams Target Romance
The second lawsuit filed by the SEC targets another fraudulent platform, CoinW6, which allegedly swindled at least 11 investors out of $2.2 million between July 2022 and December 2023. This time, the scammers pretended to be young, attractive individuals looking for romance. They would develop long-term online relationships with their victims before suggesting cryptocurrency investments.
Once the fraudsters had earned the victims’ trust, they introduced them to the CoinW6 platform, promising high returns. The victims were shown fake returns on their investments, leading them to invest even more. Some victims were pressured to withdraw from retirement accounts or borrow money from friends and family to continue “growing” their investments.
Heightened Risks for Retail Investors
Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, emphasized the dangers of these schemes. “Relationship investment scams, especially those involving crypto, pose a catastrophic risk to retail investors. Fraudsters create fake crypto ecosystems that show false information to lure unsuspecting victims,” said Grewal.
As pig butchering scams grow more popular, the SEC warns the public to remain vigilant against investment opportunities promoted by strangers, especially on social media platforms.