Americans are being defrauded by “pig butchering” cryptocurrency investment scams, with criminals utilizing social media to cheat thousands of people into losing hundreds of millions of dollars, according to U.S. authorities.
“Pig butchering” involves scammers tricking a victim, referred to as a “pig,” into investing money in cryptocurrencies by promising a high rate of return. According to an FBI press release on April 5, the scam pulls on “heartstrings and purse strings.” The fraud is named for the way in which scammers feed potential victims with promises of romance and riches.
Once scammers build a trusting relationship with victims, they float the possibility of investing in cryptocurrencies. After the victims invest as much funds as possible, the scammers cut them off and run away with their money. Criminals involved in the pig butchering scam mine social media and dating apps for victims.
The scam began in China in 2019, and is now becoming more prevalent in the United States. Last year, the FBI’s Internet Crime Complaint Center received more than 4,300 complaints related to these scams which totaled $429 million in losses.
In a statement, Jason Kane, deputy assistant director of the U.S. Secret Service Office of Investigations, called the pig butchering scheme as the “next generation of the long con,” according to The Washington Post.
“Fraudsters may identify their victims and coerce them into investments, producing so-called returns on the investments to solicit further investments. The public must be vigilant in their online activity, aware of who they are interacting with and suspicious of any solicitation of funds from an unknown source,” he said.
Defrauding Victims
In November, the U.S. Attorney’s Office for the Eastern District of Virginia announced the seizure of seven domain names that were used in the pig butchering scam.
A court document related to the case reveals the fraud faced by Victim 1 who lost millions of dollars after they were lured into investing money at cryptocurrency investment platform simexlua.com by Suspect 1. In May, Victim 1 had made an investment of around $400, which over the next four months ballooned to $9.6 million.
The mobile app used to send messages to Victim 1, notifying earning profits that were “fictitious” in nature. When trying to withdraw the money, Victim 1 would be contacted by customer service representatives who ask them to make additional payments as “fees” and “taxes.” Initially, Victim 1 transferred certain funds to make “income tax payments.”
“This tactic of Suspect 1 and customer service requesting ‘taxes’ and ‘fees’ continued until August when Victim 1 determined it was a scam and stopped making investments,” according to the document.
Identifying Fraud
A consumer alert issued by the Michigan Department of Attorney General asks people to “always remain vigilant and alert” for scams
It lists certain red flags, like strangers sending text messages out of the blue, those who attempt to quickly move the conversation to another social media site, people chit-chatting about insider investment knowledge, an investment app flagging an “untrusted” warning, and investments that sound too good to be true.
The FBI advises people to never send money, trade, or invest based on the advice of a person they have only met online.
“Don’t talk about your current financial status to unknown and untrusted people … Don’t provide your banking information, Social Security number, copies of your identification or passport, or any other sensitive information to anyone online or to a site you do not know is legitimate,” the agency’s press release warns.
