Pork slaughter scams involve scammers befriending victims through text-based social media apps, gaining their trust, and then convincing them to deposit large amounts of money into fictional crypto platforms. Afterwards, the fraudsters steal the money and disappear.

The two lawsuits filed by the SEC on these charges are the first enforcement actions against such crypto scams and come ahead of the day when the U.S. House Financial Services Committee will hold a hearing on pork slaughter scams.

“Relationship-based investment scams, including cryptoasset investments, pose the risk of catastrophic losses for retail investors, and the threat is increasing as these scams rapidly become popular among fraudsters,” Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, said in a press release.

“In these two cases, we allege that fraudsters have created fake crypto ecosystems that offer false information to investors. Our allegations are a reminder that the public should be more wary of investment opportunities promoted by unknown individuals on social media.”

The first of the lawsuits filed by the SEC was against the fake crypto trading platform NanoBit. The lawsuit alleges that 28-year-old Jiajie Liu of Los Angeles, California, 29-year-old Fei Liao of San Gabriel, California, and 26-year-old Hua Zhao of Flushing, New York, robbed at least 18 investors of nearly $1 million worth of crypto assets and fiat assets. It is alleged that they were defrauded of money.

Liao, Zhao and Liu allegedly pretended to be professionals from the financial sector in WhatsApp groups and encouraged investors to invest in the NanoBit platform.

Although the platform shows investors that their assets are making a profit, it is stated that when a withdrawal request is made, this request cannot be fulfilled and the fraudsters disappear.

The other lawsuit filed by the SEC on Tuesday was against another fake crypto trading platform called CoinW6. This case alleges that unnamed participants defrauded at least 11 investors of $2.2 million between July 2022 and December 2023.

Rather than pretending to be financial professionals, CoinW6 scammers allegedly pose as “young and attractive professionals” and find their victims’ social media profiles and attempt to establish a romantic relationship.

Scammers develop romantic relationships with their victims for several weeks and then start talking about cryptocurrency. Victims were persuaded to invest in CoinW6, mistaking their romantic connection for real.

The online interface showed investors that their investments were generating huge returns, and the scammers pressured investors into depositing more money. They suggested investors withdraw money from retirement accounts or borrow money from family and friends.

Last year, investors lost a record $5.6 billion due to crypto scams, according to a recent report from the FBI. Of this, $4 billion went to investment scams, particularly pork slaughter scams.

This report highlights the devastating impact of crypto scams on investors and the importance of taking precautions against such scams.