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

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.

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.