A growing scam has hit the cryptocurrency market, which includes extensive contact to gain trust before stealing the victim's investments.
Cryptocurrency scams are on the rise. In 2022, $5.9 billion was lost, according to the Chainalysis 2023 Crypto Crime Report. One style of scam mixes romance and friendship with investment scheming. The name of this scam, pig butchering, gets its name from gaining the trust of the victim before stealing the money. An example of a pig butchering scam made headlines in 2022 when a man lost $1 million after initial contact with a scammer pretending to be an old colleague on WhatsApp.
Find out more about this scam and how it is targeting cryptocurrency investments.
What is a pig butchering scam?
The pig butchering scam, also known as a romance scam, is a long-term fraud that combines investment schemes, romance scams and cryptocurrency fraud. This scam originated in Southeast Asia, and the name originates from the Chinese phrase "Shāz Hū Pán," meaning pig butchering. A ring of cryptocurrency scammers search dating and social media sites for victims.
The scammer typically creates a fake account and reaches out to potential victims through sites such as Tinder or WhatsApp. The goal is to become this victim's "lover" or "friend" through cordial discussions.
The analogy comes from gaining trust in the victim -- fattening up the pig -- then stealing cryptocurrency or money -- the butchering. This scam can happen with a romance scam on a dating app. The scam may also start as a text from a wrong number or a direct message on social media. The scammer may even pose as a long-lost contact to the victim.
How a pig butchering scam works
The scammer initiates contact with the potential victim through social media, dating apps or a text message. After the scammer finds their next victim, they make consistent contact to establish trust, which can take weeks or months, depending on the victim.
After gaining trust, the scammer then encourages the victim to invest in cryptocurrency trading. The scammer guarantees the victim will make money, either through an insider tip or some investor knowledge. Then the scammer tells the victim to download an app or visit a website to make cryptocurrency trades. Sometimes, they offer to trade alongside the victim. However, this platform is controlled by scammers.
The scammers may simulate a trade to make it appear the victim is earning money or may even tell the victim to withdraw some of the "profits" to gain more trust.
The victim is then encouraged to add more money to the account. However, if the victim wants to withdraw funds, the account says the victim needs to pay fees or taxes to access it. After the victim realizes the platform is fake, the transactions disappear on the blockchain, never to be seen again.
How to spot a pig butchering scam
As with any other scam, look for promises of large and quick returns. Avoid any transactions that request upfront payment in cryptocurrency. Also, avoid mixing online dating with any investment advice from a person never met face to face.
There are other red flags and signs of pig butchering scams to watch for too:
Wrong number messages
Scammers may start the pig butchering scam by sending messages on social media, dating apps, or WhatsApp or even by sending text messages trying to reach someone else. Even though it appears to be an accident, these contacts are not mistakes. The scammer wants to start a conversation. Even after the person says they have the wrong person, the scammer will try to continue the conversation.
Don't respond to any unsolicited texts no matter what the person says. Delete the message and block the person or phone number. Report the user to the social media platform by going to the profile and following the report prompts. Most social media platforms will also ask for a reason or issue to report the user.
Offers of guaranteed returns on cryptocurrency
When it comes to investing, there are no guaranteed returns. The reason people fall for this trap is the pig butchering scam is not a quick hit. Fraudsters take time to build the trust of their victims, so investment talk doesn't always happen early in these discussions. Be especially wary of cryptocurrency talks.
Beware of being directed to any investments with high profits. Don't get involved with any sites or platforms promoted by an online contact. Don't share any personally identifiable information with an online contact, including financial accounts.
Offering extravagant gifts
Pig butchering scams may move slowly to gain trust, but some try to tempt the victim with promises of elaborate gifts or expensive vacations.
If the person comes on too strong with big promises, it's best to follow any suspicions and block them.
Scammer trades with the victim
The scammer will ask the victim to download a cryptocurrency investment app. Typically, there are tiers to this app requesting a minimum investment. The scammer will trade with the victim to show them how it works and show how they invest their money.
The scammer will want to trade together to earn more profits. They will say that it is safer to trade together to show the victim the platform. Avoid using a platform recommended by an online-only contact.
The platform may permit small withdrawals at first. However, as the person invests more money, the online contact may turn the questions or withdrawals over to the platform's customer service team. When the person asks the customer service team to withdraw money, there will be various excuses to prevent the person from getting their money, such as technical issues or the server being down.
Pig butchering scams try to get as much money as possible, so the victim may even be told they have to pay large fees or taxes to withdraw money. The site may also say that the account is frozen, and the investor will lose money without paying fees.
How to avoid pig butchering scams
Before investing any money, including cryptocurrency, double-check the official website URL to see if it matches the recommended site. Watch for misspelled URLs that have a slight difference from the main financial institution, such as "chase.com" vs. "chasse.com." Always do research on investments, and be cautious of get-rich-quick scenarios.
Always check out the legitimacy of an app before downloading. There have been reports of pig butchering scam apps making their way into both the Apple and Google app stores. Check out sites such as the Better Business Bureau or Reddit for the latest scams.