SEC Targets “Pig Butchering” Crypto Scams: Details

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The U.S. Securities and Exchange Commission (SEC) has taken its first decisive step against a growing crypto scam trend known as “pig butchering.” On September 17, the SEC filed lawsuits against five entities and three individuals connected to the fake exchanges NanoBit and CoinW6.

These platforms are accused of swindling unsuspecting investors out of nearly $3.2 million by gaining their trust through social media relationships.

First Formal Action

According to the SEC, these scams represent the regulator’s first formal enforcement actions of this nature. Gurbir Grewal, the SEC’s Division of Enforcement director, emphasized that the scammers created deceptive crypto ecosystems, displaying false information to investors.

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The SEC’s complaint against CoinW6 was filed in a California federal court, where the platform was accused of executing a fraudulent scheme alongside a network of individuals who posed as young, attractive professionals.

Allegations

These fraudsters targeted at least 11 investors between July 2022 and December 2023, primarily contacting them via LinkedIn and Instagram. Over time, they nurtured romantic relationships over WhatsApp, eventually convincing victims to invest in CoinW6’s fake staking, mining, and yield farming products, which claimed to offer daily returns of up to 3%.

When investors attempted to withdraw funds, they were hit with demands for additional payments in the form of taxes and fees. Some victims were even blackmailed with threats to expose intimate conversations if they refused to pay. One individual, for instance, was threatened that their private WhatsApp messages would be leaked to family members after declining to pay a security deposit.

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Similarly, the SEC’s action against NanoBit involved a scheme where scammers, posing as financial professionals, lured victims into fraudulent investment opportunities through WhatsApp groups.

Between October 2023 and June 2024, NanoBit allegedly defrauded 18 investors out of nearly $968,000, convincing them that its affiliate, NanobitUS Securities, was an SEC-registered broker. In reality, NanoBit transferred investor funds to Hong Kong bank accounts. When investors sought to withdraw their funds, they were bombarded with additional charges, such as an alleged “Ghana miners fee” of nearly $11,000.

Serious Charges

The SEC has charged both CoinW6 and NanoBit with violating securities law antifraud provisions, and CoinW6 faces further charges for selling unregistered securities. The regulator is seeking permanent injunctions, penalties, and disgorgement of ill-gotten gains from both entities as it aims to crack down on this growing threat to crypto investors.

This action signals the SEC’s resolve to combat scam in the digital asset space and highlights the need for investors to be cautious when approached with investment opportunities