The scam is typically a long-running and trust-building communication where victims make regular crypto deposits to fraudulent websites, apps and accounts over extended periods of time. To encourage continuous payments, targets are led to believe they’re making profits on investments until it’s time to cash out. To further wring out funds, fraudsters will say that taxes or additional fees are owed, after which, the fraudsters and fake websites can vanish, the FBI said.
The ‘Pig Butchering’ Scam
Fraudsters are gaining victims’ confidence and trust by reaching out on social media or dating apps, masquerading as long-lost contacts known to the victim, or a potential friend or romantic partner. Once making successful communication and gaining trust through social engineering tactics, scammers move the conversation to investing — posing as successful cryptocurrency traders and enticing victims into phony investments. In this case, victims are “coached” through a phony investment strategy where they make continuous deposits to websites and apps run by fraudsters. “The fake websites/apps allow the victims to track their investments and give the impression they are growing exponentially,” the FBI said. The FBI said victims are also told they need to pay additional fees such as income tax when they eventually attempt to cash out their investments and often end up losing contact with fraudsters or are met with a website that is no longer available. In other cases, fraudsters hack the social media account of a victim’s contact and later contact victims from “spoofed” accounts. One such case in April this year involved Vancouver-based jeweler Anita Sikma, who was deceived by an Instagram impersonation scam when fraudsters hijacked her friend’s account, used it to contact her, and rob her of her customer base and business portfolio to propagate further Bitcoin investment scams.
Losses in the Tens of Thousands to Millions of Dollars
Numerous victims who have already reported being duped into these schemes said fraudsters told them to make wire transfers to overseas accounts or alternatively purchase copious amounts of prepaid cards. Fraudsters now also accept cryptocurrency ATM payments, the FBI said. “The use of cryptocurrency and cryptocurrency ATMs is also an emerging method of payment. Individual losses related to these schemes ranged from tens of thousands to millions of dollars.” Pig butchering started in China under the name “Sha Zhu Pan,” according to Coinbase, one of the top cryptocurrency exchanges on the market. The company also noted a spike in “pump and dump” investment scams as of this August. “Recently, [there is] a noteworthy increase in scams purporting to be foreign exchanges or crypto trading platforms that are spread by scammers who use dating apps to lure victims.”
FBI IC3 Security Recommendations
As far as how you can recognize and deter this “get rich quick” type of new scam activity, the FBI and IC3 recommend:
Verifying the validity of surprise investment opportunities from alleged long-lost friends or strangers on social media websites. Being cautious about internet addresses with misspelled URLs that impersonate official cryptocurrency exchanges. Avoiding downloading or using suspicious investing apps without verifying them online first.
As for those who believe they have fallen victim to pig butchering or other similar schemes, victims should file a report with the FBI’s IC3 and include the following information:
How you were contacted by the fraudulent individual and all the information you have about them. All of your financial transaction information with the fraudulent individual.
Cryptocurrency fraudsters benefit from the fact that cryptocurrency transactions are irreversible. While browsing social media platforms such as Instagram and Facebook, you will notice a lot of phony user profiles in the comments section claiming that someone helped them get rich. Avoid interacting with these messages at all costs. Stay cautious, and for further reading, we’ve put together a full guide to Bitcoin and cryptocurrency scams to watch out for in 2022.
