In fact, just this week NFT-UNI.com, yet another domain used in a “pig butchering” scam was seized by the U.S. Secret Service. Another one. This isn’t an esoteric issue for tech bros to argue about over lattes. We’re not just talking about bankers’ greed—we’re talking about real people losing their life savings. One victim from New York was fleeced out of $172,405.61. Total losses from that one website alone topped $4.5 million. It's easy to get lost in the technical jargon of Web3, but let's not forget the human cost. These scams are robbing families blind and undermining public trust. The question now is how do we prevent it?

Decentralization Alone Isn't A Shield

The knee-jerk reaction in some corners of the crypto world is to scream about overreach. Regulation? Never! Decentralization is the cure-all, they say. Let's be honest with ourselves: decentralization didn't stop NFT-UNI.com. That didn’t stop the scammers from continuing to target messaging on vulnerable consumers. In truth, the illusion of anonymity and complexity of blockchain transactions arguably protected them.

The idea that any regulation is by definition bad is not just an oversimplification, it’s a threat. That’s anti-regulatory nonsense — it’s like claiming that seatbelts kill the “innovation” of driving. If so, they’d be maybe just a tad annoying, but they would still be life-saving. Thoughtful, targeted regulation isn't about crushing Web3. It’s in creating a sustainable future that accommodates it. It’s about earning trust, so that more folks can feel at ease in sharing and engaging.

I'll say it again: Trust is paramount. Without trust, Web3 is doomed.

  • Investment scams cost victims over $3.3 billion in 2022, according to the FBI.
  • Crypto-related schemes accounted for $2.57 billion of that, a 183% increase.
  • Older Americans lost $3.4 billion to fraud in 2023 alone. They thought they were investing for their retirement. They were wrong.

Smart Regulation, Not Stifling Regulation

Okay, Clara, you might be thinking, "so you're all for regulation? What does that even look like?"

Not a heavy-handed, top-down, one-size-fits all approach that stifles innovation. I'm talking about smart regulation. Protective regulation that focuses on the distinct vulnerabilities that scammers prey upon.

We must be honest and open about the fact that oftentimes anxiety and fear is a byproduct of not knowing what the future holds. It’s understandable to be concerned about unintended harmful impacts. That’s a good thing, because it’s a mistake we can readily learn from.

  • Enhanced KYC/AML: Crypto exchanges need to do a better job of verifying the identities of their users and monitoring suspicious transactions. This isn't about invading privacy; it's about preventing criminals from using these platforms to launder money. Think of it like airport security – a necessary inconvenience to protect everyone.
  • Cross-Border Collaboration: Pig butchering scams are often international operations. Law enforcement agencies need to work together across borders to track down these criminals and bring them to justice.
  • Education is Key: We need to educate the public about the risks of crypto scams. This means providing clear, accessible information about how these scams work and what people can do to protect themselves.

Enforcement challenges The increase in pig butchering scams is not solely a financial concern. It’s death by a thousand cuts. It’s an existential threat to the entire Web3 ecosystem. If they don’t feel safe to engage, to participate, they’re just going to leave. And who can blame them?

Web3's Future Depends On It

The problem is that the libertarian ideal of a wholly unregulated, radically decentralized utopia is an ideal. In reality, we need guardrails to keep ourselves safe from the evildoers. We need responsible innovation, not reckless abandon.

Consider what we experienced during the early internet days. It was the Wild West. Scams, viruses, internet pedophiles and every other dark corner of the web lurked there. The internet didn't collapse. It evolved. Regulations were put in place. Security measures were developed. The internet grew into the essential, unrivaled engine of economic and societal change it is today.

Web3 can follow the same path. With the right principles and industry cooperation, we can build a safe, trusted, and innovative ecosystem. That assumes that we’re being honest with ourselves about the challenges we face, and it’s not possible without a commitment to responsible regulation. The other option is to allow the pig doggers to run amok and wipe out all that we’re attempting to create. That’s a future I am not willing to live in.

Web3 can follow the same path. We can create a safe, trusted, and innovative ecosystem. But it requires us to be honest about the challenges we face and to embrace responsible regulation. The alternative is to let the pig butchers run wild and destroy everything we're trying to build. And that's a future I refuse to accept.