SEC Goes After “Pig Butchering Scams” In First Of Its Kind Lawsuits

On September 17, 2024, the U.S. Securities and Exchange Commission (“SEC”) filed two first-of-their-kind securities fraud lawsuits against those behind a pair of “pig butchering schemes” that allegedly solicited investments in fake cryptocurrency platforms NanoBit Limited (“NanoBit”) and CoinW6 to scam victims out of nearly $3 million.

According to Wired, “pig butchering” is a type of scam that emerged in the last five years and involves building relationships with victims, usually by texting potential targets and getting them talking.  After building rapport, the scammers introduce the victim to a special investment opportunity.  Eventually, the victim sends funds through a malicious platform designed to look legitimate, and the scammers launder the money from there.  Wired explains that these scams take time and careful planning from a large workforce, including those “abducted and trafficked to Southeast Asian scamming compounds that typically operate with thousands of forced workers.”  Recently, the scam centers have been detected around the world. 

The SEC alleges that NanoBit has its principal place of business in Colorado, and that its officers and/or managers are unknown.  NanoBit allegedly defrauded at least 18 investors out of nearly $1 million by posing as financial industry professionals in groups on the messaging platform WhatsApp.  The alleged scammers falsely told investors that its affiliate, NanobitUS Securities, was a registered broker and affiliated with other reputable entities.  Eventually, investors were encouraged to put their money into NanoBit’s crypto trading platform and were led to believe they were making profits.  In reality, no transactions took place on the platform.  When investors tried to withdraw their profits, the defendants would give excuses and demand additional fees, or would disappear entirely.

The SEC describes CoinW6 as “an unincorporated business with no known address and no known officers or directors.”  The agency alleges that the CoinW6 scheme participants contacted prospective investors over LinkedIn, Instagram, and other social media platforms.  The alleged schemers would often claim to have mistakenly stumbled on the target’s profile, and would then pursue romantic relationships with them over WhatsApp.  Often, after a month of conversations, the scammer would finally introduce the targets to “cryptocurrency,” and recommend investment into crypto products offered on the CoinW6 platform.  Investors were allegedly told that they were earning huge returns, when in reality, the defendants had already misappropriated their crypto assets.  After a few months of operating the fraud on a particular website, and as investors tried to withdraw funds, CoinW6 removed content from the website and continued the fraud under a new web domain.  According to the SEC, the CoinW6 scheme defrauded at least 11 investors out of more than $2.2 million.

The SEC Enforcement Director, Gurbir S. Grewal, stated that relationship investment scams "pose a risk of catastrophic harm to retail investors, and the threat is increasing rapidly as these scams become more popular with fraudsters."