Cryptocurrency continues to disrupt mainstream channels, with experts and common folk seeing its absolute adoption within the next decade. However, the advent of cryptocurrency also urges bad actors to ramp up their criminal schemes to continue running off with people’s investments.
Where there is money, there are also scams — the same can be said for cryptocurrency. From fake social media crypto giveaways and phishing scams to Ponzi and Bitcoin investment schemes, it is sometimes astonishing how crypto felons come up with such ideas.
Now, an old crypto scheme has been given a new name, costing traders and holders millions in investments. The culprit? The so-called “pig butchering.”
Pig butchering is a type of modus operandi when scammers cultivate trust with their victims before ultimately pressing them to deposit more of their cryptocurrency holdings into fake digital wallets or websites owned by the scammer.
The term “Pig Butchering” basically comes from a farmer fattening up the pig before slaughtering. In this case, the scammers fatten up their victims before going for the kill.
Earlier this year, the FBI raised the alarm about what they describe as a new cryptocurrency scam. They claim that pig butchering is “run by a fraud ring of cryptocurrency scammers who mine dating apps and other social media for victims.”
While there are lots of reported methods for pig butchering, scammers often follow the same core steps: hunt, raise, kill, and overkill. If you’ve watched the true crime docu-film “The Tinder Swindler,” some pig butchering methods will be familiar to you. Some scams would just present you with investment opportunities.
A Pig Butchering scammer will reach out through social media such as dating apps like Tinder, Bumble, or famous instant messaging applications. The first step is basically catfishing, where the criminal pretends to be someone successful (and sometimes good-looking).
Through the scammer’s persistent posturing, flaunting their (fake) wealth from business and multiple investments, including cryptocurrencies, and generally grand lifestyle, a potential victim will be reeled in.
Unlike other scams that ask for large sums of money upfront, Pig Butchering requires scammers to work slowly to convince their victims to move their holdings away from legitimate exchanges and onto fake websites owned by the scammer.
This step is deemed the most crucial part of the scam, as it requires the scammer to gain complete trust from the victim—that is why more often than not, Pig Butchering would take weeks or months to accomplish.
Scammers would communicate with their victims habitually, just like how a trusty friend or a loving partner would.
Once they see that their flattery has reeled in the victim, they will start claiming that they have received great financial returns from a cryptocurrency trading or mining platform. The criminal will convince their victim to co-invest with them or teach them how to trade successfully.
Once the victim has been “fattened up,” the scammer will prepare for the butchering.
In some cases, the criminal will direct their victims to a fraudulent website posing as a legitimate cryptocurrency platform. They will then instruct the clueless victim to deposit funds into an account controlled by the scammer.
There are reports that some victims receive a small sum claimed to be “returns” on their investments to convince them to invest even larger amounts of funds. If the victim also failed to meet the minimum, the scammer or the platform will “loan” them money.
After the victim has deposited a significant amount of funds, the fake platform will halt withdrawals. The victim will then be prompted to pay extra verification and service fees or taxes before their funds will be “released” to extort them for more money.
Bold scammers, after fooling their victims, would sometimes want more.
If one went the Tinder Swindler route (i.e., romantically linking with the victim), they would, at times, harass the victim, threatening to publicize sensitive information and media the victim may have shared. They would ask their “already-butchered hogs” to return the funds they have “lent.”
Regardless, once the scammer is satisfied with their “earnings,” they will block the victim and the fake cryptocurrency website or platform will lock the victim out of their account.
This will leave the victim suffering not only from their financial losses but also from mental anguish.
One of the most common scam techniques is to encourage victims to engage in any type of conversation. Once an innocent user has engaged, the scammer’s communication will be more frequent. Talks will start on mundane things and will later escalate to more serious topics, including investment opportunities.
Refusal to Talk Over Phone/Video Chat
Like any other scammers, Pig Butchers will come up with every possible excuse to avoid phone and video talks. They might say a loved one died, their English is bad, or any other stories they could fabricate.
A sign that a user may be talking to a Pig Butchering scammer is when the conversations quickly shift from daily routines to cryptocurrency investments that promise high returns. The criminal may also boast about properties and status symbols to “prove” that they have reaped the benefits of investing. At times, the scammers would share trade secrets that guarantee “risk-free” earnings.
The fraudster will ask the victim about their crypto trading experience and even offer to coach them. The scammer may reassure the victim that they should try to invest if they are uncomfortable or to start small; after a small amount, which will likely result in profits, the victim will likely be enticed to invest even more.
In scams, the person would often remind potential victims about huge winnings, and what they could do with the huge sum. If a victim is hesitant about investing huge amounts of money, the scammer will convince them that more can be raked if the initial investment is already hefty. This popular scam technique takes advantage of one’s innate greed and desensitizes the victim to invest amounts they are initially uncomfortable with losing.
In the FBI’s April 2022 report, there are five important actions that investors need to remember to avoid getting caught in a pig butchering scam. The U.S. agency writes:
- Never send money, trade, or invest based on the advice of someone you have only met online.
- Do not talk about your current financial status to unknown and untrusted people.
- Do not provide your banking information, social security number, copies of your identifications, such as passports, or any other sensitive information to anyone online or to a site you do not know is legitimate.
- If an online investment or trading site is promoting unbelievable profits, it is most likely that — unbelievable.
- Be cautious of individuals who claim to have exclusive investment opportunities and urge you to act fast.
In a CNBC interview, Solidus Labs COO, Chen Arad, said that victims of pig butchering should not feel ashamed. “These [criminals] are really expert manipulators,” Arad sympathizes. “If you haven’t heard of this type of scam, it’s easy to fall prey to.”
Like Arad, veteran cryptocurrency traders and reputable industry watchers have always warned people that when engaging with this digital asset, it’s important to remember that high opportunity comes with an equal amount of risks. High returns never come risk-free.