CFPB warns of rise of “pig-butchering” and other crypto scams

Leading business pages are pondering whether the bigger crypto exchange Binance will bail out the other big crypto exchange FTX. Meanwhile, the CFPB has released a new bulletin subtitled: “Pig butchering” and other scams lead list of crypto-asset complaints.”

“Our analysis of consumer complaints suggests that bad actors are leveraging crypto-assets to perpetrate fraud on the public,” said CFPB Director Rohit Chopra. “Americans are also reporting transaction problems, frozen accounts, and lost savings when it comes to crypto-assets. People should be wary of anyone seeking upfront payment in crypto-assets, since this may be a scam.”

PIRG’s 2021 report “Virtual wallets, real complaints” identified rising consumer complaints about virtual wallets, including those from crypto firms. We’ve also warned about crypto scams, such as in this blog post, which warned:

“Crypto exchanges are selling complex, unregulated financial products via super simple, gamified apps. And because anybody with an internet connection can create a new cryptocurrency, the door is wide open for scammers.”

Pig-butchering? According to the CFPB:

“Some scammers employ a “pig butchering” technique, where fraudsters spend time gaining the victim’s confidence, trust, and romantic affection in order to get victims to set up crypto-asset accounts, only for the scammers to ultimately steal all their crypto-assets.”

The CFPB and PIRG both urge consumers to beware of common scams (including fake customer support), to report suspicious claims that crypto-assets are “FDIC-insured,” and to file complaints with the CFPB. The CFPB particularly notes scams on older Americans and servicemembers: “complaints include reports of scams targeting servicemembers through identity theft or romance scams.”

.As I watched the World Series earlier this month, I noticed that umpires were still prominently displaying the FTX crypto logos on their uniforms. But, unlike watching the Super Bowl earlier this year, I didn’t see any crypto-ads, for any coin, any exchange or even any NFT (non-fungible token)! Did they only run crypto ads when I left the room?

In any case, while leading business pages are wondering what’s going on in the big crypto exchanges and asking whether the billionaires should be concerned, the CFPB is warning average Americans that crypto will probably not make you rich, but will likely take your money with “get-rich” schemes.