A pig butchering scam is a type of fraud where scammers build a relationship with their victims, often romantic, to gain their trust and then convince them to invest in a fake cryptocurrency scheme.
The “pig butchering” refers to the way scammers “fatten up” their victims by gaining their trust and then “slaughter” them by stealing their investments.
The scam originated in China in 2016 or earlier and has since spread globally, often operating through online dating apps and social media platforms. The term “pig butchering” comes from an analogy comparing the process of gaining the victim’s trust to the fattening of pigs before slaughter.
$2.57 B
Losses in 2022 from cryptocurrency investment scams, including pig butchering
$5.6 B
The total losses attributed to these scams in 2023
Southeast Asia has become a hub for pig butchering scams for several reasons:
- Rise of online gambling: Initially, many Southeast Asian countries saw a boom in online gambling, which attracted criminal organizations. When governments cracked down on these operations, some transitioned to pig butchering, exploiting their existing infrastructure and networks.
- Cryptocurrency adoption: The region has seen significant cryptocurrency adoption, providing fertile ground for scammers to operate and launder money.
- Weak law enforcement: Some countries in Southeast Asia have weaker law enforcement and judicial systems, making it easier for scammers to operate with impunity.
- Corruption: Corruption can facilitate these scams, allowing criminal organizations to bribe officials and avoid prosecution.
How does pig butchering scam work?
The investment scheme is the core of the pig butchering scam. It’s the tool used to “slaughter” the victim after they’ve been “fattened up” with trust and affection. Here’s how it works:
1. Initial contact and building trust
- Accidental contact: Scammers often initiate contact through seemingly random messages on social media, dating apps, or even text messages, pretending they have the wrong number or have found the victim through a mutual friend.
- Building rapport: They invest time getting to know the victim, often feigning shared interests, and gradually introducing elements of romance or friendship to build trust. This process can sometimes take weeks or even months.
- Creating a persona: Scammers create fake profiles with stolen photos and elaborate backstories, presenting themselves as successful investors or professionals with insider knowledge of cryptocurrency markets.
2. Introducing the investment
- Casually mentioning investments: The scammer will subtly introduce the topic of investments, often claiming to have a family member or mentor who is a successful cryptocurrency investor. They might share stories of their own investment successes to pique the victim’s interest.
- Offering “help”: The scammer will then offer to help the victim invest in cryptocurrency, promising high returns with little to no risk. They may even offer to guide them through the process step-by-step.
3. The fake platform and initial investments
- Directing to a fraudulent platform (fake brokerage): The victim is directed to a fake website or app that mimics a legitimate cryptocurrency exchange. This platform is entirely controlled by the scammers.
- Showing early “profits”: The victim is encouraged to make a small initial investment and will see their “investment” grow rapidly on the fake platform. This creates a false sense of security and encourages further investment.
- Allowing small withdrawals: To further build trust, the scammer may allow the victim to withdraw a small amount of their “profits.” This reinforces the illusion that the investment is legitimate and profitable.
4. Increasing investments and the “slaughter”
- Encouraging larger investments: As the victim gains confidence, the scammer encourages them to invest larger amounts, often pressuring them with claims of limited-time opportunities or upcoming market booms.
- “Pig killing”: Once the scammer believes they have extracted as much money as possible, they disappear, often cutting off all contact. The victim is left with significant financial losses and no way to recover their funds.
5. Paying taxes
- The withdrawal request: When the victim, believing they’ve made significant profits, attempts to withdraw their money from the fake brokerage platform, the scammer introduces a new hurdle.
- The tax demand: The scammer informs the victim that they must first pay taxes on their investment gains before they can withdraw their funds. This plays on the victim’s desire to comply with the law and avoid any legal trouble.
- The false sense of legitimacy: The scammer may even provide fake tax documents or direct the victim to a fraudulent website that mimics a government tax agency to make the demand seem more legitimate.
- The final “slaughter”: The victim, desperate to access their supposed profits, often pays the “taxes,” only to find that their money is gone and the scammer has disappeared. This leaves the victim with even greater financial losses and a sense of betrayal and despair.
6. Additional tactics
- Love bombing: Scammers may shower the victim with affection and attention to manipulate their emotions and make them more susceptible to the scam.
- Social proof: Victims may be added to group chats or shown fake testimonials from other “investors” to create the impression that the investment is legitimate and widely successful.
- Urgency and pressure: Scammers often create a sense of urgency, pushing the victim to invest quickly before they “miss out” on a lucrative opportunity.
How scammers launder stolen crypto?
- Stolen crypto is shuffled between many wallets and exchanges, making it hard to trace.
- Each wallet may hold funds from multiple victims, further mixing the money.
- Cryptocurrency might move between different types of wallets and blockchains, creating a confusing trail.
- Why? Stable value, low fees, and high speed for quick and cheap laundering.
Not just one scam
Pig butchering scams are not isolated incidents. Data shows that the cryptocurrency wallets used to receive funds from victims are often connected to other scams. In fact, over 75% of the wallets studied showed signs of sophisticated money laundering, where criminals try to hide the origin of stolen funds.
This means that instead of just looking at individual scams, it’s important for law enforcement to take a broader approach and investigate the entire network of scammers and money launderers. This can help them understand how these groups operate and ultimately stop them.
For example, TRM Labs study shows how scammers run multiple pig butchering scams, all using the same money laundering system. The wallets linked to just one of those scammers held an average of $26.8 million, with some holding $5.1 million.
How to protect yourself from pig butchering scams?
Protecting yourself from pig butchering scams requires a healthy dose of skepticism and caution, especially when interacting with people you’ve met online. Here are some key tips to keep in mind:
1. Be wary of unsolicited messages
- Don’t engage with strangers: If you receive a random message from someone you don’t know, especially if it seems out of the blue or too good to be true, it’s best to ignore it.
- Be skeptical of “wrong number” texts: This is a common tactic used by scammers to initiate contact. If someone claims to have the wrong number but continues to engage in conversation, be cautious.
- Don’t share personal information: Avoid giving out personal details like your phone number, social media handles, or email address to people you’ve only met online.
2. Take your time
- Don’t rush into relationships: Scammers often try to build trust quickly by showering you with attention and affection. Take your time to get to know someone before sharing personal information or making any financial decisions.
- Be suspicious of overly flattering or romantic messages: If someone seems too eager to please or professes their love quickly, it could be a red flag.
3. Verify identities
- Do your research: If you meet someone online who seems interesting, take some time to verify their identity. Search for them on social media or do a background check if necessary.
- Be wary of inconsistencies: If their story doesn’t add up or they seem to be hiding information, it could be a sign that they’re not who they claim to be.
- Use reverse image search: See if their profile picture appears elsewhere online. This can help you determine if they’re using a stolen photo.
4. Be cautious with investments
- Never invest based solely on someone’s advice: Always do your own research and consult with a trusted financial advisor before making any investment decisions.
- Be wary of high-pressure tactics: If someone is pressuring you to invest quickly or making promises of guaranteed returns, it’s likely a scam.
- Avoid unfamiliar platforms: Only invest through reputable platforms that you know and trust. Be wary of websites or apps that you’ve never heard of before.
5. Trust your instincts
- If something feels off, it probably is: If you have any doubts about someone or an investment opportunity, trust your gut and walk away.
- Don’t be afraid to say no: It’s okay to say no to investment opportunities or to end conversations with people who make you feel uncomfortable.
6. Report suspicious activity
- Report scams to the authorities: If you believe you’ve been targeted by a pig butchering scam, report it to your local law enforcement agency.
- Share your experience: Sharing your story with others can help raise awareness and prevent others from falling victim to similar scams.
By following these tips and staying vigilant, you can significantly reduce your risk of falling prey to a pig butchering scam. Remember, if something seems too good to be true, it probably is.
FAQs about pig butchering scams
Once trust is established, scammers subtly introduce the topic of investments, often claiming to have a family member or mentor who is a successful cryptocurrency investor. They might share stories of their own investment successes and offer to help the victim invest, promising high returns with little to no risk.
Scammers typically direct victims to a fraudulent investment platform, often disguised as a legitimate cryptocurrency exchange or trading website. These platforms are controlled by the scammers, allowing them to manipulate data and create the illusion of profit.
Be wary of platforms promising guaranteed profits or unusually high returns. Check the website’s security certificate and look for online reviews or complaints. If you’re unsure, it’s best to avoid investing.
Unfortunately, recovering money lost in a pig butchering scam is very difficult. Once the scammer disappears, the funds are often moved through a complex network of wallets and exchanges, making them nearly impossible to trace.
While many pig butchering scams focus on cryptocurrency, they can also involve other types of investments, such as foreign exchange (forex) trading or precious metals. The key is that the investment opportunity is fake and designed to steal your money.