“Pig Butchering” scams have even entered the lxicon of language used by the FBI when reporting on these love to crypto scams. Victims are encouraged to report such scams to the FBI using this reference, “Pig Butchering PSA”.
The term Pig Butchering comes from the Chinese phrase; “Sha Zhu Pan” (from tail to snout) that loosely translates to “pig butchering,” the scam involves cryptocurrency, or digital currency that’s exchanged through a computer network and not through a financial institution like a bank.
Authorities say the scam is largely controlled by Asian crime gangs, which have set up compounds in Myanmar, Cambodia, and other locales where they coerce legions of men and women to wrangle victims online.
The Australian Federal Police also warned against pig butchering scams in the lead up to Valentine’s Day 2024.
The advent of pig butchering kits on the Dark Web is indicative of the spread of this specific form of crypto scam.
Here’s how the “Pig Butchering” Crypto Scam works, according to the FBI:
Using a script, the scammer contacts an individual, typically through a dating or social media app or via phone calls and text messages that are meant to appear to have been misdialed. After a period of time building trust and rapport, sometimes through the exchange of racy pictures, the scammer convinces the victim to invest in cryptocurrency with the promise of high-yield returns.
Some scammers even point the victims to websites that appear authentic but are actually controlled by the thieves.
After the victim has made several cryptocurrency investments through the fake sites, they discover any request to make a withdrawal or cash out their investment is denied. Sometimes, the scammers request additional investments, taxes or fees to obtain the money. Once the victim’s funds are exhausted, the scammer then vanishes cutting off contact with the victim and taking the money with them.
Spotting the Scam: Red Flags to Look Out For:
- You receive “wrong number” texts
- Someone you meet online suddenly starts talking about crypto
- A match on a dating site quickly starts “love bombing” you
- Scammers use emotional manipulation to build your trust
- A friend wants you to invest in a crypto exchange
- You’re told to download a “special” crypto trading
- Investment sites offer tiers with minimum investment amounts
- The scammer starts trading with you
- You get a quick, small return on your initial investment
- You’re told you need to pay a hefty tax bill
Pig butchering scams use social engineering to build your trust over weeks and months. If you see any of these warning signs, break off all contact with the scammer.
Examples of Money Being Scammed:
John: Invested $10,000 in a “Pig Butchering” scheme promising 500% returns in a month. Lost all his money when the scammer vanished.
Sarah: Fell for a fake crypto project claiming to revolutionize the industry. Invested $5,000 and never saw any returns.
Michael: Received an unsolicited email offering a once-in-a-lifetime investment opportunity. Invested $3,000 and later realized it was a scam.
FBI: See further below for actual FBI prosecuted cases reported to the FBI
Staying informed, conducting thorough research, and exercising caution are paramount when navigating the crypto landscape. By being aware of red flags, such as unrealistic promises and lack of transparency, investors can protect themselves from falling victim to scams like the “Pig Butchering” scheme. Remember, if an investment opportunity sounds too good to be true, it probably is.
HBO Show Host, John Oliver recently presented a programme on “pig Butchering”:
Here are three ‘Pig Butchering” Scams successfully prosecuted by the FBI:
Cyber Scam Organization Disrupted Through Seizure of Nearly $9M in Crypto
The Justice Department announced on Tuesday, 21 November 2023, the seizure of nearly $9 million worth of Tether, a cryptocurrency pegged to the U.S. dollar. These seized funds were traced to cryptocurrency addresses allegedly associated with an organization that exploited over 70 victims through romance scams and cryptocurrency confidence scams, which are widely known as “pig butchering.”
“Through this significant seizure, we disrupted the financial infrastructure of an organized network of scammers who stole millions from victims across the United States. These scammers prey on ordinary investors by creating websites that tell victims their investments are working to make them money. The truth is that these international criminal actors are simply stealing cryptocurrency and leaving victims with nothing,” said Acting Assistant Attorney General Nicole M. Argentieri of the Justice Department’s Criminal Division. “The department hopes this recovery of assets will bring some closure and a sense of justice to the over 70 victims affected by this series of scams. This seizure should also serve as a reminder to cybercriminals that, although the current landscape of the cryptocurrency ecosystem may seem like an ideal way to launder ill-gotten gains, law enforcement will continue to develop the expertise needed to follow the money and seize it back for victims.”
According to court documents, criminal actors worked together to target victims and convince them to make cryptocurrency deposits by fraudulently representing that the victims were making investments with trusted firms and cryptocurrency exchanges. In reality, the purported firms and cryptocurrency exchanges were non-existent trading platforms. Agents and analysts from the U.S. Secret Service (USSS) were able to trace those victim deposits and observed that the funds were quickly laundered through dozens of cryptocurrency addresses and exchanged for several different cryptocurrencies, a money laundering technique often referred to as “chain hopping.” These techniques are used to “layer” the proceeds of criminal activity into new cryptocurrency ecosystems, all to obfuscate the nature, source, control, and ownership of those proceeds. The seized funds were linked to numerous victim reports made via the FBI’s Internet Crime Complaint Center (IC3) and Federal Trade Commission’s (FTC) Consumer Sentinel Network.
“This seizure is the culmination of the exceptional hard work and collaborative partnership between the Justice Department and the United States Secret Service,” said U.S. Attorney Ismail J. Ramsey for the Northern District of California. “Silicon Valley remains one of the world’s preeminent locations for cryptocurrency firms. As such, we remain dedicated to using all tools at our disposal to bring justice to the victims of frauds and scams. Even when money and criminals are abroad, we will work with our partners to seize cyber criminals’ illegal proceeds.”
“This seizure exemplifies the Secret Service’s mission to protect the financial infrastructure of the United States. We remain determined and vigilant to combat cyber-enabled financial fraud,” said Special Agent in Charge Shawn Bradstreet of the USSS San Franscisco Field Office. “It is a priority for the Secret Service to protect the financial security that citizens work so hard to obtain. We want to thank the Justice Department for their partnership, dedication, and outstanding work on this case.”
The USSS San Francisco Field Office investigated this case.
Trial Attorney Georgiana MacDonald of the Criminal Division’s Computer Crime and Intellectual Property Section, National Cryptocurrency Enforcement Team, and Assistant U.S. Attorneys Chris Kaltsas and Galen Phillips for the Northern District of California are handling the case, as well as the seizure and forfeiture actions.
The department would like to acknowledge Tether for its assistance in effectuating the transfer of these assets.
Justice Department Seizes Over $112M in Funds Linked to Cryptocurrency Investment Schemes
The Department of Justice announced on Monday, 23 April 2023, that it has seized virtual currency worth an estimated $112 million linked to cryptocurrency investment scams.
Seizure warrants for six virtual currency accounts were authorized by judges in the District of Arizona, the Central District of California, and the District of Idaho.
According to court documents, the virtual currency accounts were allegedly used to launder proceeds of various cryptocurrency confidence scams. In these schemes, fraudsters cultivate long-term relationships with victims met online, eventually enticing them to make investments in fraudulent cryptocurrency trading platforms. In reality, however, the funds sent by victims for these purported investments were instead funneled to cryptocurrency addresses and accounts controlled by scammers and their co-conspirators.
“Transnational criminal organizations are combining confidence scams with technological savvy to swindle Americans out of their hard-earned funds,” said Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division. “These particularly vicious frauds – where scammers carefully cultivate relationships with their victims over time – have devastated families and cost individuals their life savings. Now that we have seized this virtual currency, we will seek to swiftly return it to victims. In addition to our tireless efforts to disrupt these schemes, we must also work to raise public awareness and help inform potential victims: be wary of people you meet online; seriously question investment advice, especially about cryptocurrency, from people you have not met in person; and remember, investments that seem too good to be true, usually are.”
In 2022, investment fraud caused the highest losses of any scam reported by the public to the FBI’s Internet Crimes Complaint Center (IC3), totaling $3.31 billion. Frauds involving cryptocurrency, including pig butchering, represented the majority of these scams, increasing a staggering 183% from 2021 to $2.57 billion in reported losses last year.
According to the FBI, the highest number of reports came from victims between the ages of 30 and 49. In these schemes, often called “Sha Zhu Pan,” a Chinese phrase that loosely translates to “pig butchering,” scammers often target their victims through social networking and online communications platforms, dating websites, and phone calls and text messages that are meant to appear to have been misdialed. After gaining the trust of their victims – sometimes over a period of months – scammers eventually introduce the idea of trading in cryptocurrency. They then direct victims to cryptocurrency investment platforms or to co-conspirators posing as investment advisors or customer service representatives. Scammers control websites that are built to look similar to legitimate trading platforms, applications that victims download onto their phones, or malicious smart contracts accessed through cryptocurrency wallet software. Once victims make an initial “investment,” the platforms purport to show substantial gains. Sometimes, victims are even allowed to withdraw some of these initial gains to further engender trust in the scheme. It is not until a large investment is made that victims find that they are unable to withdraw their funds. Even when a victim is denied access to their funds, the fraud is often not yet over. Scammers request additional investments, taxes, or fees, promising that these payments will allow victims access to their accounts. These scam operations often continue to steal from their victims and do not stop until they have deprived victims of any remaining savings.
“Depriving scam organizations of their ill-gotten gains is an important part of our strategy to combat these ruthless schemes,” said Director Eun Young Choi of the Criminal Division’s National Cryptocurrency Enforcement Team (NCET). “We will continue to use all tools at our disposal to disrupt and deter cryptocurrency confidence schemes, including by following the money on the blockchain and seizing cryptocurrency to return funds to victims, and by targeting and taking down online infrastructure used by the scammers. Today’s announcements also demonstrate the value of early notification by victims to law enforcement; we thank those victims who came forward to notify the FBI when they were targeted by this scheme.”
“Financial fraud schemes like these demonstrate the great lengths criminals will take to swindle innocent victims out of their money,” said Assistant Director Luis Quesada of the FBI’s Criminal Investigative Division. “We continue to see these schemes evolve and provide new avenues for criminals to exploit. Today’s announcement should serve as reminder of the FBI’s unwavering commitment, alongside our federal and international law enforcement partners, to investigating and pursuing criminal actors who seek to defraud the American public. There is no place beyond the reach of the FBI.”
The FBI Phoenix Division is investigating this case.
Assistant U.S. Attorneys Seth Goertz and Ryan Ellersick for the District of Arizona, Daniel Boyle for the Central District of California, and Bill Humphries for the District of Idaho are in charge of the seizures announced today, with significant assistance and coordination by Georgiana MacDonald of the NCET and Tian Huang and Brandon Burkart of the Criminal Division’s Fraud Section.
Four Individuals Charged for Laundering Millions from Cryptocurrency Investment Scams:
A seven-count indictment was unsealed on Wednesday, 13 December 2023 in Los Angeles charging four individuals for their alleged roles in a scheme to launder the proceeds of cryptocurrency investment scams and other fraudulent schemes involving millions of dollars in victim funds.
Lu Zhang, 36, of Alhambra, California; Justin Walker, 31, of Cypress, California; Joseph Wong, 32, Rosemead, California; and Hailong Zhu, 40, Naperville, Illinois, are charged with conspiracy to commit money laundering, concealment money laundering, and international money laundering. Zhang and Walker were arrested and made their initial appearances in federal court yesterday.
According to court documents, Zhang, Walker, Wong, and Zhu allegedly conspired to open shell companies and bank accounts to launder victim proceeds of cryptocurrency investment scams, also known as “pig butchering,” and other fraudulent schemes. They transferred the funds to domestic and international financial institutions. The overall fraud scheme in the related pig-butchering syndicate involved at least 284 transactions and resulted in more than $80 million in victim losses. More than $20 million in victim funds were directly deposited into bank accounts associated with the defendants.
According to court documents, “pig butchering” fraud schemes (a term derived from a foreign-language phrase used to describe these crimes) consist of scammers encountering victims on dating services, social media, or through unsolicited messages or calls, often masquerading as a wrong number. Scammers initiate relationships with victims and slowly gain their trust, eventually introducing the idea of making a business investment using cryptocurrency. Victims are then directed to other members of the scheme operating fraudulent cryptocurrency investment platforms and applications, where victims are persuaded to make financial investments. Once funds are sent to scammer-controlled accounts, the investment platform often falsely shows significant gains on the purported investment, and the victims are thus induced to make additional investments. Ultimately, the victims are unable to withdraw or recover their money, often resulting in significant losses for the victims.
If convicted, Zhang and Walker face a maximum penalty of 20 years in prison.
Acting Assistant Attorney General Nicole M. Argentieri of the Justice Department’s Criminal Division, U.S. Attorney Martin Estrada for the Central District of California, and Special Agent in Charge William Mancino of the U.S. Secret Service’s Criminal Investigative Division made the announcement.
The U.S. Secret Service’s Global Investigative Operations Center is investigating the case.
The case is jointly prosecuted by the U.S. Attorney’s Office for the Central District of California and the Computer Crime and Intellectual Property Section’s (CCIPS) National Cryptocurrency Enforcement Team (NCET), which was established to combat the growing illicit use of cryptocurrencies and digital assets. CCIPS’ NCET conducts and supports investigations into individuals and entities that enable the use of digital assets to commit and facilitate a variety of crimes, with a particular focus on virtual currency exchanges, mixing and tumbling services, and infrastructure providers. The NCET also works to set strategic priorities regarding digital asset technologies, identify areas for increased investigative and prosecutorial focus, and lead the department’s efforts to collaborate with domestic and foreign government agencies as well as the private sector to aggressively investigate and prosecute crimes involving cryptocurrency and digital assets.
CCIPS/NCET Trial Attorney and Assistant U.S. Attorney Maxwell Coll for the Central District of California, CCIPS/NCET Trial Attorney Stefanie Schwartz, and Assistant U.S. Attorney Nisha Chandran for the Central District of California are prosecuting the case.
If you or someone you know is a victim, report it to the IC3.gov. In the report, please reference “Pig Butchering PSA” and include as much information as possible in the complaint including names of investment platforms, cryptocurrency addresses and transaction hashes, bank account information, and names and contact information of suspected scammers. Maintain copies of all communications with scammers and records of financial transactions.
If you are a victim of a cryptocurrency scam, or other scam involving the use of the Internet, please file a report with the IC3 at ic3.gov and with the FTC at www.reportfraud.ftc.gov