| Photo by André François McKenzie on Unsplash
NEWARK, NJ – New Jerseyans are warned about romance and cryptocurrency scams known as “pig butchering” — a common scheme where perpetrators fatten victims up and defraud them of all their funds.
The Bureau of Securities, charged with protecting investors from investment fraud and regulating the securities industry in New Jersey, ordered three website operators involved in cyber scams to stop offering fraudulent cryptocurrency investments in violation of the New Jersey Securities Law.
According to Attorney General Matthew J. Platkin, “Pig butchering” scams begin when fraudsters often use social media to contact victims, luring them into fraudulent cryptocurrency-investment schemes. The fraudsters gain the victim’s trust, often by starting a “romantic relationship” or a simple friendship to gain their victim’s trust.
The fraudster then convinces the victim to invest in phony investments before falsely claiming the initial investment grew significantly. The scammers then ask for more and more money and, as part of the scam, demand multiple fees to withdraw the funds. Even when the victim pays the “withdrawal fees,” the fraudsters do not refund the victim’s money.
“These scammers build up a sense of comradery between them and their victim—all to squeeze every cent they possibly can out of these people with promises of huge returns on investments,” said Attorney General Platkin. “We are working around the clock to protect the victims of these types of scams and to show these scammers our laws still apply in cyber space.”
The Bureau found that the online entities covered by today’s orders, Meta Capitals Limited, Cresttrademining Limited, and Forex Market Trade, have engaged in fraud in connection with the offer and sales of securities on their websites by conduct that collectively includes:
- Omitting or misrepresenting that fees or charges would be imposed before investors could withdraw their funds;
- Omitting material facts to potential investors, such as the identity of their principals, how investors’ funds would be used, and the risks of their investment plans; and
- Posting bogus testimonials from clients that use stock photos and, or canned statements that appear on multiple cryptocurrency investment websites under different entity names.
The Bureau also found that all four entities have been violating the New Jersey Securities Law by offering and selling unregistered securities and that Meta Capitals Limited and Cresttrademining Limited have been acting unregistered broker-dealers.
“It is despicable for fraudsters to take advantage of people who are simply looking to invest in their future,” said Division of Consumer Affairs Acting Director Cari Fais. “With these enforcement actions, the Bureau is making it clear that it will pursue scammers who prey on people’s trust.”
Pig butchering scams are rapidly becoming more popular in the U.S., with an estimated $429 million in losses in 2021. Unfortunately, New Jersey investors are not immune—the victims in these four cases were defrauded out of more than $100,000.
“Even the savviest of investors can have a hard time recognizing fraud when it’s being perpetrated by someone for whom they have a romantic interest,” said Amy Kopleton, Chief of the Bureau of Securities. “This makes social media sites appealing to scammers as they know it is easier to scam someone who thinks they are in a relationship. To try to prevent New Jersey residents from becoming victims, the Bureau is raising public awareness of these schemes and educating investors on how to avoid scams.”
The Bureau offered some tips to avoid “pig butchering” scams, which include:
- Never respond to unsolicited messages from unknown contacts.
- Never send funds to or invest based solely on the recommendation of a social media relationship.
- Be wary of investments promising high returns with no risk or guarantees.
- Watch out for platforms and domain names impersonating legitimate financial institutions.
- Never be rushed into an investment by the threat of a “limited time only” offer.
- Verify the identity of anyone who offers to sell you investment and research the investment they are offering.
For information on how to prevent yourself from being a victim of an investment scam, general information on cryptocurrency investments, and to learn about being an informed investor, visit the Bureau’s investor education page at https://www.njconsumeraffairs.gov/bos/Pages/investormaterials.aspx.
Supervising Investigator Rachel Glasgow and Investigator Meryl Griff Hubscher of the Bureau of Securities within the Division of Consumer Affairs handled the Bureau’s investigation.
–With Jay Domingo/PDM
