A mere seven days prior to Valentine’s Day, the Commodity Futures Trading Commission’s Office of Customer Education and Outreach (OCEO) took a proactive stance, releasing a cautionary notice aimed at dating and messaging apps as well as social media users.
The advisory sounded the alarm on the pervasive threat of romance scams entwined with cryptocurrencies and foreign exchanges, colloquially known as “sha zhu pan” or pig butchering.
In their regulatory advisory unveiled on Wednesday, the OCEO delineated the modus operandi of fraudsters leveraging dating apps and social media platforms to perpetrate romance scams.
These scams are characterized by their intricate nature, with perpetrators often engaging in a process called grooming, wherein they build trust with victims over extended periods before introducing fraudulent schemes.
Melanie Devoe, Director of OCEO, emphasized the vulnerability of individuals during Valentine’s Day, cautioning, “Financial grooming frauds can happen at any time, but Valentine’s Day is a perfect opportunity to remind people that dating and messaging apps and social media can be platforms for scams and fraudulent activity.”
She urged users to exercise skepticism, adhering to the age-old adage: “If it sounds too good to be true, it probably is.”
The advisory urged users to exercise caution when encountering unsolicited texts or messages from strangers promoting cryptocurrency investments, warning of potential ties to international criminal organizations.
These scams, the CFTC noted, are so sophisticated that they can ensnare even the most discerning investors.
Warning signs include attempts to migrate conversations from dating or social media platforms to private messaging apps, as well as claims of extraordinary wealth derived from cryptocurrency or foreign currency trading based on insider information.
While this marks the first explicit warning from the CFTC, global regulators have long issued alerts regarding such scams.
The CFTC underscored the staggering scale of financial losses, with over $3.5 billion siphoned in 2023 alone by these romance and grooming gangs.
Notable recent enforcement actions include the apprehension of Debiex for alleged misappropriation totaling $2.3 million through traditional romance scam tactics.
In a damning revelation, federal prosecutors in the US disclosed charges against four individuals last December for laundering more than $80 million accrued through pig butchering scams and other investment fraud schemes.