For the first time, the SEC is cracking down on "Pig Butchering scams." How dangerous this latest crypto-fraud is, according to authorities led by Gensler.

The U.S. stock market watchdog (SEC) accuses two fake crypto platforms of defrauding investors and stealing their money: NanoBit and CoinW6. It is the first time the SEC has acted against so-called "Pig Butchering scams."

"Pig Butchering" is a fraud practice that takes its name from farmers who fatten pigs for slaughter. Victims are "fed" by crypto scammers with promises of high returns before they are drained.

On Tuesday, the SEC filed two charges against five companies and three individuals in courts in New York and California. Apparently, investors in both cases were lured via social media through a "relationship investment fraud."

"Relationship investment fraud, including in connection with crypto investments, carries the risk of catastrophic harm to retail investors." warns Gurbir S. Grewal, director of the SEC's enforcement division.

In the SEC complaint against the pseudo-crypto trading platform NanoBit says those involved defrauded at least 18 investors of nearly a million dollars.

According to the SEC, the crypto scammers posed as financial experts in WhatsApp groups and persuaded their victims to invest money through NanoBit's platform. Afterwards, these victims could not withdraw their capital and the scammers disappeared.

Meanwhile, the suspected CoinW6 scammers posed as "young, attractive job starters" and began romantic relationships via text messages. Only then did they introduce crypto and convince their victims to invest in CoinW6.

According to the SEC, they defrauded at least 11 investors of $2.2 million in this way between July 2022 and December 2023. This type of "romantic fraud" is seen as a growing problem within the crypto industry.

According to estimates from the University of Texas, up to $75 billion was misappropriated from the victims of these crypto-frauds between 2020 and early 2024.