The US Commodity Futures Trading Commission [CFTC] has taken a significant step in protecting consumers from a growing wave of crypto fraud, specifically targeting what is known as “pig butchering” scams.
In a recent announcement, the CFTC revealed a partnership with the American Bankers Association Foundation and several federal regulators to provide targeted educational resources to help consumers recognize and avoid falling victim to these fraudulent schemes.
The CFTC’s Office of Customer Outreach and Education [OCEO] outlined the importance of this collaboration in reaching a broader audience, particularly those who trust the partner organizations involved.
Melanie Devoe, Director of OCEO, emphasized the necessity of such partnerships in spreading awareness about relationship-based confidence fraud, which costs Americans billions of dollars annually.
Devoe noted,
“Partnering with federal and state regulators as well as consumer protection groups and other organizations helps spread the CFTC’s customer education message and hopefully reaches people before they can get scammed.”
Notably, "pig butchering" is a sophisticated scam in which fraudsters gain victims’ trust via fake romantic relationships, ultimately convincing them to invest in fraudulent crypto schemes.
The anatomy
The CFTC chalked out that scammers often initiate contact with potential victims through social media platforms, build a fake romantic relationship to gain their trust.
Once this relationship is established, they lure victims into investing in fraudulent crypto ventures, often leading to significant financial losses.
This educational effort is part of a broader collaboration with organizations such as the Securities and Exchange Commission [SEC], the Financial Industry Regulatory Authority [FINRA], and the North American Securities Administrators Association [NASAA].
A looming peril
Pig butchering scams have been on the rise in the crypto sector for quite a while now. Back in 2022, the Delaware Department of Justice’s Investor Protection Unit took action against individuals operating these scams, issuing “cease and desist” orders to the 20+ entities involved.
More recently, in July 2024, the US Attorney’s Office for the District of Columbia filed a civil forfeiture case to recover roughly $2.5 million in crypto assets tied to foreign individuals involved in pig butchering.
The FBI has also reported a significant increase in these scams, with around $4 billion lost to pig butchering in the US alone in 2023—a 53% rise from the previous year.
This uptick in fraud highlights the importance of the CFTC’s current partnerships. By collaborating with various organizations and regulatory bodies, the CFTC intends to create a more comprehensive defense against these scams.
