‘Pig Butchering,’ Other Crypto Fraud Complaints Flood into CFPB

About 40% of crypto-related complaints received by the Consumer Financial Protection Bureau in the last four years are reports of fraud, led by “pig butchering” and other romance scams, the agency said.

The CFPB has received more than 8,300 cryptocurrency complaints from consumers between October 2018 and September 2022, the bureau said in a report Thursday.

Complaints related to transaction difficulties made up a quarter of the total in its database. Complaints about crypto assets not being available as promised represented 16% during the period, the CFPB said.

Other frequently cited complaints include mandatory arbitration clauses employed by cryptocurrency firms and difficulties in getting restitution following a scam.

“Our analysis of consumer complaints suggests that bad actors are leveraging crypto-assets to perpetrate fraud on the public,” CFPB Director Rohit Chopra said in a statement.

The bureau has received about 1,400 virtual currency-related complaints between January and September this year. That compares with 2,404 for all of 2021.

“Pig butchering”—in which fraudsters pose as financial successes to gain the trust of a victim—was a particularly widespread scam, the bureau said. Fraudsters often coach their victims on setting up a cryptocurrency account and steal the account’s assets, the CFPB said.

Such romance scammers have more frequently targeted older consumers, the CFPB said.

Cryptocurrencies like Bitcoin have been rocked in the last few months in what is commonly known as “crypto winter.”

FTX.com, a leading cryptocurrency exchange, teeters on the brink of failure after its liquidity dried up and rival Binance backed out of a deal to buy it.

Other large cryptocurrency exchanges like Celsius Network and Voyager Digital are in bankruptcy.

Voyager’s customers complained about losing access to their cryptocurrencies despite the company’s claims that it was insured by the Federal Deposit Insurance Corp.

The CFPB said in May that such claims about FDIC insurance could violate the law. The FDIC finalized a rule barring such claims around the same time.

The CFPB has oversight authority for the Electronic Funds Transfer Act, which governs digital payments. It also has extensive power to bring unfair, deceptive and abusive acts and practices (UDAAP) claims that could be used to go after bad actors in the crypto space.

“We will continue our work to keep the payments system safe from fraudsters targeting Americans,” Chopra said in his statement.