Key insights:

• Pig butchering scams replace Ponzi schemes as top crypto fraud, prompting CFTC’s push for public education and awareness.
• The ABA and SEC are joining the CFTC to create tools and alerts to help investors recognize and avoid crypto scams before they strike.
• The CFTC is ramping up efforts with global regulators to curb crypto fraud, file lawsuits, and boost public outreach initiatives.

The Commodity Futures Trading Commission (CFTC) has initiated a new effort to address the rising wave of cryptocurrency-related scams, particularly focusing on a scheme known as “pig butchering.” This fraud has inflicted substantial financial losses on American investors, with billions of dollars lost annually. 

To tackle the issue, the CFTC’s Office of Customer Outreach and Education (OCOE) has partnered with the American Bankers Association Foundation (ABA) and the U.S. Securities and Exchange Commission’s (SEC) Office of Investor Education and Advocacy to raise public awareness and provide educational resources aimed at preventing these scams.

Pig Butchering Scams on the Rise

Pig butchering scams involve criminals who manipulate victims by establishing trust over an extended period, typically through social media platforms or dating apps. After gaining the victim’s confidence, scammers convince them to invest in fake cryptocurrency schemes, ultimately leading to significant financial losses. 

These scams have increasingly replaced traditional Ponzi schemes, allowing fraudsters to target individuals with more precision and sophistication. The CFTC and its partners are committed to educating the public about how these scams operate. By raising awareness, the Commission aims to give consumers the knowledge to recognize red flags and avoid becoming victims. 

Melanie Devoe, Director of the OCOE, emphasized the critical role that public education plays in combating these fraudulent schemes, stating that reaching potential victims before they fall prey is essential.

Key Roles of Partner Organizations

As part of this initiative, the American Bankers Association Foundation will be responsible for creating and distributing infographics that break down how pig butchering scams work. According to a CFTC release, these educational infographics will offer insights into the tactics used by scammers, such as building long-term relationships, gaining trust, and persuading victims to invest in fraudulent crypto schemes. 

The ABA aims to provide consumers with easily accessible information that helps them spot these scams early on. In addition to the ABA’s efforts, the SEC’s Office of Investor Education and Advocacy will contribute by issuing investor alerts designed to warn the public about these scams. 

The alerts will offer practical advice, such as ignoring unsolicited messages from unknown contacts or online platforms. Both the ABA and SEC are working closely with the CFTC to ensure that these educational resources are widely distributed and accessible to the public, ultimately helping to prevent further victimization.

Regulatory Push Against Crypto Scams

The CFTC’s new initiative is part of a broader effort by both U.S. and global regulators to clean up the digital asset market, which fraudsters have increasingly targeted. In recent years, the CFTC and SEC have taken action against numerous cryptocurrency firms for violations of regulatory guidelines. Other agencies, such as the FBI, have also issued warnings about emerging threats. 

For instance, the FBI recently raised concerns about North Korean hackers targeting Bitcoin ETF issuers, highlighting the growing complexity and scale of cyber threats in the crypto space. Through its partnership with the ABA and SEC, the CFTC hopes to reduce the number of pig butchering scams and other forms of crypto fraud. 

Public education and outreach remain central to these efforts as regulators seek to tighten oversight of the evolving cryptocurrency market. By equipping consumers with the tools to recognize and avoid scams, the CFTC aims to protect investors from increasingly sophisticated fraud tactics.