SEC Charges 3 Individuals, 5 Companies With Operating Pig Butchering Scams

On Tuesday, the Securities and Exchange Commission (SEC) initiated two lawsuits, marking their first enforcement cases against crypto scams of this nature. Coincidentally, these actions were filed just one day prior to the U.S. House Financial Services Committee’s scheduled hearing on pig butchering scams.

Gurbir S. Grewal, Director of the SEC’s Enforcement Division, warned in a press statement that investment scams related to relationships, including those involving cryptocurrencies, can cause severe damage to individual investors and this threat is growing rapidly as these scams gain popularity among fraudsters. In two specific instances we are accusing con artists of fabricating false crypto ecosystems to deceive investors with misleading information. These cases serve as a warning for the public to be extra cautious about suspicious investment offers promoted by unknown parties on social media.

The SEC’s lawsuit against purported crypto trading platform NanoBit alleges that participants in the scheme – including three U.S. residents named in the suit, 28-year-old Jiajie Liu of Los Angeles, California, 29-year-old Fei Liao of San Gabriel, California, and 26-year-old Hua Zhao of Flushing, New York – engaged in a coordinated scheme to defraud at least 18 investors of nearly $1 million in crypto assets and fiat currency.

Liao, Zhao, and Liu reportedly posed as experts in the financial sector within WhatsApp communities, persuading potential investors to invest in NanoBit’s platform. Despite giving the impression that their investments were earning profits, when investors attempted to withdraw their funds, they found they couldn’t – the con artists vanished with the money.

A separate legal action brought by the SEC on Tuesday targets a supposedly fraudulent cryptocurrency trading platform known as CoinW6. This lawsuit claims that unknown individuals involved in the scheme deceitfully drained at least $2.2 million from more than 11 investors between July 2022 and December 2023.

As a crypto investor, I’ve found myself cautious about schemes like CoinW6, where the participants didn’t exactly play the part of finance experts. Instead, they assumed the personas of young, attractive professionals who seemed to have stumbled upon my social media profile and expressed interest in forming a romantic relationship. This tactic, while unconventional, raised my suspicion.

In a similar fashion found in numerous pig butchering schemes, it’s claimed that the individuals accused as CoinW6 fraudsters spent several weeks cultivating romantic ties via text messages. Once these victims were emotionally invested and trusted the authenticity of their online relationships, the suspects would propose investing in CoinW6, a cryptocurrency platform.

As a researcher, I’ve uncovered concerning behavior in my investigation of the CoinW6 platform. The allegation is that the interface deceives victims into believing their investments are yielding substantial profits. This, in turn, leads to these individuals being coerced into investing increasingly larger sums into the platform. Remarkably, it’s even suggested that investors might be advised to withdraw funds from retirement accounts or borrow money from loved ones to amplify returns on CoinW6 – a practice often disguised as romantic overtures.

2021 saw an unprecedented $5.6 billion in losses from cryptocurrency fraud reported by the FBI, with a staggering $4 billion of that amount being due to investment schemes such as the notorious “pig butchering” scam.