Romance Fraud
UT finance professor teams up with world regulatory agencies in a fight against “pig butchering,” a multibillion-dollar global scam industry
Experts in a $75 billion international fraud operation called “pig butchering” will discuss recent research and implications for the world’s financial regulators during presentations Oct. 8, 11:30 a.m.-12:30 p.m. CT, at Robert B. Rowling Hall on The University of Texas at Austin campus. The free event is open to the public and the UT community; Zoom or in-person registration is required.
The event, “Romance Investment Fraud: A Global-Scale Crypto Scam,” is hosted by the Texas McCombs School of Business as part of the International Organization of Securities Commissions’ (IOSCO) World Investor Week (WIW) 2024. WIW brings together more than 100 jurisdictions to drive awareness of trending issues that affect investors around the world.
Texas McCombs Professor of Finance John M. Griffin will share data from his research released in March, the first large-scale paper on pig butchering. He revealed that schemers have stolen $75 billion globally, including $15 billion from Americans. This research with co-author Kevin Mei is the first to detail how the funds are efficiently laundered across borders through cryptocurrency channels.
Also presenting are Melanie Devoe, UT J.D. ’98, and Jorge Herrada of the Commodity Futures Trading Commission (CFTC) and Nicholas Berta of the Federal Bureau of Investigation (FBI), who will discuss regulatory and enforcement strategies to combat these scams.
Pig butchering is part of the burgeoning romance scam industry, so called because scammers with fake identities first build an emotional connection with the victims, then gradually entice them into fake crypto investments. They build trust by providing a series of “inducements” — payments usually under $500 that represent fake crypto earnings. But once the victim has emptied large sums into the fraudulent investment platform, the fraudster disappears with the money.
Pig butchering scams began in China and gained traction globally during the pandemic. The people contacting victims are often victims themselves — people who have been trafficked, working as slaves for criminal syndicates based in Southeast Asia.
“This is a festering global problem, and I’m glad these world agencies are joining forces to help stop it,” Griffin said. “More robust enforcement, regulation and public education in the cryptocurrency realm are all part of the solution.” His research on the topic was featured in Time magazine and Bloomberg earlier this year.
In July, the CFTC convened its first interagency Fraud Disruption Conference with the Department of Justice, focused on efforts to combat pig butchering and deeming the scam a top law enforcement priority. Griffin and Mei’s research on the massive impact of these schemes was cited recently in opening remarks for a U.S. House Financial Services Subcommittee hearing.
“By discovering how to track the flow of money through cryptocurrency channels, we hope to help financial regulators put an end to these heinous crimes and bring the syndicates to justice,” Griffin said.
The agenda for “‘Romance Investment Fraud: A Global-Scale Crypto Scam” is as follows:
11:30–11:35 a.m. CT — Introduction by Melanie Devoe, CFTC Director for the Office of Customer Education and Outreach
11:35 a.m.-noon CT — Presentation and Q&A from John Griffin, Texas McCombs Professor of Finance
12:05 -12:30 p.m. CT — Panel Discussion with Devoe and Herrada of the Commodity Futures Trading Commision and Berta, Supervisory Special Agent in the FBI’s Economic Crimes Unit
