Pig butchering scam
A pig butchering scam is a type of long-term scam and investment fraud in which the victim is gradually lured into making increasing contributions, usually in the form of cryptocurrency, to a fraudulent cryptocurrency scheme.[1] They are commonplace on social apps, where, in October 2023, twelve percent of Americans using said apps had been victims, up from five percent in 2018.[2] The scammer builds trust with the victim through online communication, subsequently persuading them to invest in a fraudulent cryptocurrency scheme. The "butchering" or "slaughtering" of the victim transpires when their assets or funds are stolen.[3]
Perpetrators are typically victims of a fraud factory,[4] lured from abroad under false pretenses and then forced to commit the fraud by organised crime gangs.[5] Many operations are run from areas of Myanmar which are outside central government control due to the ongoing civil war, with one important hub being the town of Myawaddy in Kayin State, near the border with Thailand. Many of the gangs running pig butchering scams, along with the people forced to commit the fraud, are ethnically Chinese.[6]
History
Pig butchering scams originated in 2020 as a regional scam in China and later spread throughout Southeast Asia at the height of the COVID-19 pandemic. In Sihanoukville, Cambodia—once a prosperous gambling town—many local gambling gangs transformed casinos into scam operation centers performing pig butchering scams. This was likely a result of a lack of casino attendance on account of the COVID pandemic, including the pandemic making international travel difficult, and the Cambodian government cracking down on commercial gambling.[5][7]
Pig butchering scams gained international momentum through the exploitation of online dating apps and social media platforms.[8] Scammers crafted elaborate fake identities to establish romantic or emotional connections with victims, thus marking a departure from conventional financial scams by integrating psychological manipulation. This early phase of these scams primarily targeted local populations but quickly expanded as digital connectivity grew.[5]
The scams evolved significantly with the integration of sophisticated techniques, including the creation of fake online investment platforms and the use of social engineering. A key aspect of this evolution was the use of cryptocurrency for transactions, which appealed to scammers due to its difficulty to trace and recover. The scams' globalization can be attributed to the increased ubiquity of digital interactions and the rising popularity of cryptocurrencies, which provided a new avenue for such fraudulent activities on a global scale.[9]
Implementation
Pig butchering scams involve a series of meticulously planned steps to deceive and exploit victims, typically focusing on cryptocurrency investment fraud.[1]
- Gaining trust: Scams often begin with casual conversations initiated by the scammer, who may pretend to have received the victim's contact details accidentally or through a mutual acquaintance. These initial interactions are designed to build trust and may involve the use of attractive profile images to lure victims.
- Introducing the investment: As trust is established, the scammer introduces the victim to a fraudulent investment scheme, promising significant returns in a short period. The scammers use persuasive tactics and counterfeit investment portfolios to convince victims of the scheme's legitimacy.
- Collecting money: After convincing the victim to invest, scammers collect funds, often through digital payment platforms or cryptocurrencies, to complicate tracking and tracing of the transactions.
- Disappearance of the scammer: Once a substantial amount has been collected, or when victims attempt to withdraw funds, scammers become unreachable, delete their online presence, or create new identities, leaving the victims with no way to recover their funds.
Furthermore, the scammers develop fake brokerage websites and mobile applications to add legitimacy to their scheme, making it difficult for victims to distinguish them from genuine platforms. The report[which?] underscores the impact of these scams, with millions of dollars lost by victims, and emphasizes the importance of caution and vigilance in online investments.[citation needed]
Countermeasures
The IRS has issued warnings about the rising prevalence of these scams, particularly targeting U.S. taxpayers. The agency notes that losses often reach hundreds of thousands of dollars, with some victims losing as much as $2 million.[9]
An important aspect of countering pig butchering scams involves tracing stolen cryptocurrencies. This process is intricate due to the decentralized and pseudo-anonymous nature of cryptocurrencies. Specialists in this field utilize various tools and techniques to track the flow of stolen digital assets through blockchain networks.[citation needed]
The process typically begins with the collection of relevant transaction data, such as transaction IDs and wallet addresses associated with the scam. Advanced blockchain analysis tools are then employed to trace the path of the stolen funds. These tools can identify patterns and link different transactions to specific wallets, which are essential in building a case against the perpetrators.[10]
Consequences
The scam typically combines elements of romance and investment fraud, and often involve the gradual building of a relationship with the victim, leading to significant financial losses. Victims are lured into investing in fake opportunities, particularly with cryptocurrencies, and end up losing large sums of money. The psychological impact is equally severe, as victims not only face financial ruin but also the loss of what they perceived as a genuine, intimate relationship. These type of scams are particularly insidious because they play on both the financial aspirations and emotional needs of individuals, leaving victims feeling betrayed, embarrassed, and reluctant to discuss their experience with others or report it to authorities.[11][12]
In popular culture
The 2023 Chinese movie No More Bets is a crime drama based on interviews with real victims of the scams. It garnered attention and success in China, bringing the scams and the issues related to them to the forefront of public discourse. The movie highlights the plight of the numerous low-level scammers who are themselves victims of coercion, having been lured from their homes by promises of stable employment, only to find themselves trapped and forced into committing these scams.[5]
See also
References
- ^ a b "Unmasking Pig-Butchering Scams and Protecting Your Financial Future - Noticias de seguridad - Trend Micro ES". www.trendmicro.com.
- ^ "The Pig Butchering Scam: 10 Common Warning Signs". www.aura.com.
- ^ "District of Massachusetts | United States Files Forfeiture Action to Recover Cryptocurrency Traceable to Pig Butchering Romance Scam | United States Department of Justice". www.justice.gov. 2024-03-13. Retrieved 2024-04-28.
- ^ "FinCEN Issues Alert on Prevalent Virtual Currency Investment Scam Commonly Known as 'Pig Butchering'". www.fincen.gov.
- ^ a b c d "The involuntary criminals behind pig-butchering scams". MIT Technology Review. Retrieved 2024-01-29.
- ^ Qian, Isabelle; Robles, Pablo (2023-12-17). "7 Months Inside an Online Scam Labor Camp". The New York Times. ISSN 0362-4331. Retrieved 2023-12-17.
- ^ Podkul, Cezary (13 September 2022). "Human Trafficking's Newest Abuse: Forcing Victims Into Cyberscamming".
- ^ Cryptocurrency scams metastasize into new forms Sophos News
- ^ a b "CI issues red flags, tips to avoid falling victim to pig butchering schemes during International Fraud Awareness Week | Internal Revenue Service". www.irs.gov. Retrieved 2024-01-29.
- ^ "Pig Butchering Scam - Protect Yourself!". CNC Intelligence. 2022-12-23. Retrieved 2024-01-31.
- ^ "Why "Pig Butchering" and Other Scams Are on the Rise | Psychology Today". www.psychologytoday.com. Retrieved 2024-01-31.
- ^ "'Pig Butchering' Scams: What They Are and How to Avoid Them | FINRA.org". www.finra.org. 2022-12-13. Retrieved 2024-01-31.
Further reading
- Griffin, Jon; Mei, Kevin (29 February 2024). "How Do Crypto Flows Finance Slavery? The Economics of Pig Butchering". SSRN. University of Texas at Austin. SSRN 4742235. Retrieved 1 March 2024. 54 pages. Pig-Butchering Scams Net More Than $75 Billion, Study Finds—a summary of the paper on Yahoo! Finance (original article behind a paywall at Bloomberg News)
- Tan, Xun (2023). "The New Network Fraud of Pig Butchering from the Perspective of Criminal Law". Lecture Notes in Education Psychology and Public Media. 17 (1): 57–62. doi:10.54254/2753-7048/17/20231215.
- An explanation of pig butchering scams in the February 25, 2024 episode of Last Week Tonight with John Oliver
External links
- FBI Public Service Announcement: Cryptocurrency Investment Schemes
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