NY Attorney General Warns of ‘Pig Butchering’ Crypto Scams as Fraud Losses Climb
New York Attorney General Letitia James has issued a warning about a surge in ‘pig butchering’ investment scams that use romance and social engineering to pressure victims into converting savings into cryptocurrency. These long-con schemes have led to substantial losses: U.S. consumers reported $1 billion in crypto-related losses to the FBI in 2023 and $3 billion to the Better Business Bureau from 2021–2023. The AG highlighted that scammers often push victims to use crypto platforms and decentralized exchanges to move funds, complicating recovery. James urged vigilance, recommending that victims contact law enforcement, file complaints with state and federal agencies, and avoid moving money to unknown crypto wallets. The advisory underscores risks linked to anonymous, irreversible crypto transfers and stresses better reporting and preventive measures to protect investors.
Bearish
Warnings from a high-profile regulator about large-scale crypto fraud tend to increase investor caution and reduce risk appetite in the near term. The report cites large reported losses ($1B to the FBI in 2023; $3B to the BBB across 2021–2023), which can erode retail confidence and lower trading volumes—particularly in smaller tokens and platforms associated with peer-to-peer or decentralized flows. Scams that push victims to decentralized exchanges and anonymous wallets highlight recovery risks and regulatory scrutiny, potentially prompting exchanges and DeFi platforms to tighten controls, which can temporarily disrupt liquidity. Historically, high-profile fraud reports (e.g., 2017–2019 ICO scams, 2021 rug pulls) have correlated with short-term price weakness and increased volatility. Over the longer term, improved enforcement and clearer rules can be constructive by weeding out bad actors and improving market trust; however, the immediate market reaction is likely cautious, making the net short-term impact bearish for risk-on crypto assets.