‘Slaughtering hogs’, other crypto scam complaints pour into CFPB
About 40% of crypto-related complaints received by the Consumer Financial Protection Bureau over the past four years are reports of fraud, led by “pig slaughter” 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 agency said in a report Thursday.
Complaints related to transaction difficulties made up a quarter of the total in the database. Complaints that crypto assets were not available as promised represented 16% during the period, the CFPB said.
Other commonly cited complaints include mandatory arbitration clauses used by cryptocurrency firms and difficulties in obtaining compensation after a scam.
“Our analysis of consumer complaints suggests that bad actors are exploiting cryptoassets to perpetrate fraud on the public,” CFPB Director Rohit Chopra said in a statement.
The agency has received around 1,400 virtual currency-related complaints between January and September this year. This compares with 2,404 for the whole of 2021.
“Pig slaughter” – where scammers pretend to be financial successes to gain a victim’s trust – was a particularly widespread scam, the agency said. Fraudsters often guide their victims into creating a cryptocurrency account and steal the account’s assets, the CFPB said.
Such romance scams have more often targeted older consumers, the CFPB said.
Cryptocurrencies like Bitcoin have been rocked in recent months in what is known as “crypto winter.”
FTX.com, a leading cryptocurrency exchange, is on the brink of failure after liquidity dried up and rival Binance pulled out of a deal to buy it.
Other major cryptocurrency exchanges such as Celsius Network and Voyager Digital are bankrupt.
Voyager’s customers complained of 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 ended a rule barring such claims around the same time.
The CFPB has oversight authority over the Electronic Funds Transfer Act, which regulates digital payments. It also has extensive powers to bring unfair, deceptive and abusive acts and practices (UDAAP) allegations that can be used to go after bad actors in the crypto space.
“We will continue our work to keep the payment system safe from fraudsters who target Americans,” Chopra said in his statement.
