CFTC Charges Man With Fraud in ‘Pig Butchering’ Crypto Romance Scam

The scheme swindled at least 29 investors out of more than $1.3 million, according to the CFTC.

AccessTimeIconJun 22, 2023 at 9:01 p.m. UTC
Updated Jun 22, 2023 at 9:37 p.m. UTC


The Commodity Futures Trading Commission (CFTC) has filed an enforcement action against a California man and his company for running an elaborate romance scam that swindled dozens of investors out of more than $1 million, according to a Thursday press release.

  • How Grayscale's 2.5% Fees Could Impact Investor Interest
    11:27
    How Grayscale's 2.5% Fees Could Impact Investor Interest
  • WazirX Hacked for $230M; Mark Cuban, Vitalik Buterin Speak Up on Crypto and Politics
    02:02
    WazirX Hacked for $230M; Mark Cuban, Vitalik Buterin Speak Up on Crypto and Politics
  • Biden Dropout Chances Rise on Polymarket After Covid Diagnosis
    00:59
    Biden Dropout Chances Rise on Polymarket After Covid Diagnosis
  • Crypto Markets Trends as Traders Anticipate Spot Ether ETFs
    09:55
    Crypto Markets Trends as Traders Anticipate Spot Ether ETFs
  • The action, filed in the U.S. District Court for the Central District of California, alleges that Cunwen Zhu, a California businessman, tricked at least 29 customers out of more than $1.3 million allocated for digital asset commodity and forex trading through his company, Justby International Auctions, between April 2021 and March 2022. Instead of investing customers’ funds in crypto and forex exchanges, Zhu collected the money for his personal use, transferring the majority of the funds to bank accounts, digital wallets and digital asset trading platforms controlled by those he employed in his alleged scheme.

    Zhu’s partners cultivated romantic relationships with his alleged victims, to “fatten them up with falsehoods, before soliciting the customer to participate in a fraudulent financial opportunity,” the CFTC said in a statement. The romance scam, known as “Pig Butchering,” has become increasingly prevalent since the pandemic, with loneliness among individuals living under stay-at-home orders on the rise.

    “As people sought to escape the isolation of the pandemic and form a connection to others online, fraudsters saw a new venue to prey on and to take advantage of the public,” said CFTC Director of Enforcement Ian McGinley.

    This isn’t the first time the CFTC has sounded the alarm on romance-related scams involving digital assets. The CFTC has issued several customer protection fraud advisories and articles in recent months to deter users from falling for scams.

    Disclosure

    Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

    CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

    Elizabeth Napolitano

    Elizabeth Napolitano was a news reporter at CoinDesk.


    Read more about