US lawmakers eye leveraging blockchain against finance scams

United States lawmakers from the House of Representatives have introduced bipartisan legislation to combat financial fraud and so-called “pig butchering scams” that target older U.S. citizens, particularly via online means. The bill would support law enforcement officers in using blockchain technology and permit federal law enforcement to assist state and local law enforcement with tracing tools for blockchain technology.

The ‘Guarding Unprotected Aging Retirees from Deception (GUARD) Act’ was introduced on April 21 by Republican Representative Zach Nunn (R-IA) and co-sponsored by fellow Republican Rep. Scott Fitzgerald (R-WI) along with Democratic Rep. Josh Gottheimer (D-NJ).

“Scammers prey on Iowa retirees and steal their hard-earned money. In 2023 alone, the Iowa Attorney General’s office received more than 13,000 financial fraud reports resulting in approximately $42.6 million in financial losses,” said Rep. Nunn. “Iowa retirees shouldn’t have to worry about fraudsters robbing them of their savings with fake investment schemes. But if they are scammed, law enforcement should have the tools needed to bring their case to justice.”

The Federal Trade Commission (FTC) data released in March showed that U.S. consumers reported losing more than $12.5 billion to fraud in 2024, representing a 25% increase over the prior year.

According to Rep. Nunn, older adults are bearing the brunt of this increase in frauds and scams, suffering significantly higher financial losses. For example, in 2021, the median loss for individuals over 70 was $9,000, compared to $2,400 across all age groups.

A particularly pervasive scam that has become more common in the past couple of years is “pig butchering,” named for how bad actors “fatten up” their victims to extract the most possible value. The scammer, or network of scammers masquerading as an individual, will typically develop an online or virtual relationship with the victim—often romantic—and then convince them to invest more and more money in fraudulent investments.

Based on recent data from blockchain analysis firm Chainalysis, pig butchering schemes accounted for 33.2% of all digital asset-related scam revenue in 2024.

This was evidenced in November of 2023, when the U.S. Department of Justice (DOJ), using blockchain, froze approximately $225 million linked to an international human trafficking syndicate in Southeast Asia responsible for “pig butchering” scams. Another example came in late 2023 when 3,500 cybercriminals associated with online scamming were arrested and $300 million in stolen funds seized by authorities during a South Korea-led Interpol operation.

The GUARD Act would support such efforts by allowing state and local law enforcement to use eligible federal grant funding to investigate financial fraud and “pig butchering” scams against retirees. It would also permit federal law enforcement to assist state and local law enforcement with tracing tools for blockchain technology.

“We need twenty-first-century tools to crack down on fraudsters who use every trick in the book—social media, emails, texts, and phone calls—to swindle Americans out of billions of dollars every year,” said Rep. Gottheimer, Co-Chair of the bipartisan Law Enforcement Caucus and member of the House Financial Services Committee. “That’s why I’m proud to co-lead the bipartisan GUARD Act to ensure that law enforcement can access cutting-edge technologies to stop these scams and protect our communities.”

Rep. Fitzgerald echoed this sentiment, saying the bill represented “a critical step in equipping our state and local law enforcement with the tools they need to combat financial fraud more effectively.”

He added that “by harnessing innovative technologies like blockchain, we can better protect Wisconsin seniors and families from increasingly sophisticated scams.”

The GUARD Act is also supported by the AARP, the Iowa State Police Association, the Financial Technology Association, the Consumer Bankers Association, the America’s Credit Union Association, the Digital Chamber, the National Police Association, the Crypto Council for Innovation, and the Iowa Bankers Association.

“This bipartisan legislation would help to equip state and local law enforcement, who are on the front lines responding to fraud, with the resources they need to investigate fraud, hold criminals accountable and bring justice to victims,” said Bill Sweeney, AARP Senior Vice President of Government Affairs.

Watch | Certihash Sentinel Node: Improving cybersecurity with blockchain