Cryptocurrency scams are nothing new, but a recent case of pig butchering has shocked the world with its scale and cruelty. Imagine building trust with someone, fattening their hopes for financial gain, and then, when the time is right, mercilessly slaughtering their dreams and draining their wallets. This isn’t a horror story, it’s the grim reality of “pig butchering,” a new form of financial fraud that has already stolen a staggering $80 million from unsuspecting victims in the US and beyond.
Pig butchering is a type of fraud that involves luring victims into fake crypto investments through online relationships, and then stealing their money. The scam has been linked to human trafficking networks in Southeast Asia, where victims are forced to work as scammers under brutal conditions. This article by Finestel will explain how the scam works, who are the victims and the perpetrators, and what actions have been taken to stop it.
What is Pig Butchering?
Imagine befriending someone online, building trust, and then watching them lure you into a fraudulent investment scheme that drains your life savings. Pig butchering operates just like that. Scammers prey on victims, often through social media or dating apps, cultivating elaborate online personas and feigning romantic interest or friendship.
Over time, they subtly steer the conversation towards seemingly lucrative cryptocurrency investments, convincing victims to deposit funds into fraudulent platforms or apps. These platforms are mere facades, designed to display fabricated gains and allow scammers to disappear with the money once enough trust has been built.
How the Scam Works: A Three-Stage Process
Pig butchering is a sophisticated and elaborate scam that follows a three-stage process:
- Stage 1: Building Trust. The scammers create fake profiles on social media or dating apps, and contact potential victims, often pretending to be a wrong number. They then engage in long-term conversations, building trust and rapport. They share fake stories of success, using screenshots or testimonials to prove their credibility. They also express romantic interest or friendship, and sometimes send gifts or money to the victims.
- Stage 2: Introducing Crypto. Once the trust is established, the scammers introduce the idea of crypto investments, and recommend fraudulent platforms or apps. They promise high returns, and use pressure tactics or incentives to persuade the victims to invest. They also provide guidance and support on how to use the platforms or apps, and how to transfer money.
- Stage 3: Stealing Money. The victims are initially shown fake gains on their investments, which encourages them to invest more. However, when they try to withdraw their money, they face various obstacles, such as fees, taxes, or verification processes. Eventually, the platforms or apps disappear, along with the scammers and the money.
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The Scale and Impact of the Scam: A Global Problem
According to the Department of Justice (DOJ), pig butchering scams have resulted in losses of more than $200 million in the US alone since 2018. However, the scam is not limited to the US. It has also affected victims in the UK, Canada, Australia, and other countries. A Reuters investigation found that a cryptocurrency account registered in the name of a Chinese businessman in Thailand received more than $90 million linked to pig-butchering scams between January 2021 and November 2022.
The scam not only causes financial damage, but also emotional and psychological trauma. Many victims suffer from depression, anxiety, shame, and guilt after falling prey to the scam. Some even resort to suicide. The scammers show no remorse or empathy, often mocking and taunting their victims after stealing their money.
Beyond the Scam: A Human Trafficking Angle
A chilling aspect of this scam lies in its connection to human trafficking. Many pig butchering operations are run by transnational criminal organizations in Southeast Asia, who force victims of trafficking to carry out the scams. These individuals are subjected to unimaginable abuse and coercion, trapped in a cycle of exploitation that fuels the scam.
A survey by the UK’s Financial Conduct Authority revealed that 27% of UK adults who invest in crypto have been approached by someone offering unsolicited investment advice, and 45% of them have invested in a scheme that turned out to be fraudulent.
The UK government has recently imposed sanctions on nine individuals and five entities for their involvement in trafficking people in Cambodia, Laos and Myanmar, forcing them to work for online ‘scam farms’ which enable large-scale fraud. According to the UK, “Victims are promised well-paid jobs but are subject to torture or other cruel, inhuman, or degrading treatment.”
Who are the Scammers and the Traffickers?
The pig butchering scam is mainly orchestrated by Chinese criminal syndicates, who operate across Southeast Asia, especially in countries with weak rule of law and corruption, such as Cambodia, Laos, and Myanmar. These syndicates recruit, traffic, and exploit workers from various countries, such as Taiwan, Indonesia, Vietnam, Malaysia, Thailand, and Myanmar, to work as scammers in their compounds.
Many of these workers are deceived by fake job ads on social media or online platforms, offering high salaries for teaching online games, customer service, or translation. Some are lured by recruiters who pose as friends or lovers. Others are kidnapped, coerced, or sold by their families or acquaintances. Once they arrive at the scam centers, they are stripped of their passports, phones, and money, and forced to work long hours under harsh conditions. They are often subjected to physical, verbal, and sexual abuse, and threatened with violence or death if they try to escape or report to the authorities.
Some of the scam centers are located in casinos or hotels, where the workers are confined in basements or rooms with no windows. Others are in remote areas, surrounded by barbed wire, security cameras, and armed guards. The scammers use VPNs, encrypted apps, and burner phones to avoid detection and traceability. They also change their locations frequently to evade law enforcement.
What are the Solutions and Challenges?
The pig butchering scam is a complex and multifaceted problem that requires coordinated and comprehensive solutions from various stakeholders, such as governments, law enforcement, civil society, media, and technology companies. Some of the possible solutions and challenges are:
- Raising awareness and education. The public needs to be informed and educated about the signs and risks of the pig butchering scam, and how to protect themselves from becoming victims. They also need to be aware of the human trafficking aspect of the scam, and how to report any suspicious activities or cases. However, raising awareness and education can be challenging, as the scammers constantly adapt and innovate their methods and tactics, and target different groups and regions.
- Enhancing cooperation and coordination. The authorities need to cooperate and coordinate with each other, both within and across countries, to share information, intelligence, and resources, and to conduct joint investigations and operations. They also need to collaborate with civil society, media, and technology companies, to provide support and assistance to the victims, and to expose and disrupt the scam networks. However, enhancing cooperation and coordination can be challenging, as there may be legal, political, or cultural barriers, as well as issues of trust, jurisdiction, or sovereignty.
- Strengthening laws and regulations. The governments need to strengthen their laws and regulations to combat the pig butchering scam and human trafficking and to hold the perpetrators accountable. They also need to enforce their laws and regulations effectively and efficiently and to provide adequate protection and justice to the victims. However, strengthening laws and regulations can be challenging, as there may be gaps, loopholes, or inconsistencies, as well as problems of corruption, impunity, or capacity.
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How to Recover The Lost Money
Unfortunately, the victims of the latest $80 million pig butchering scam may have a hard time recovering their money, as the scammers often use untraceable methods and operate across borders. However, there are some steps that the victims can take to try to get their money back, or at least prevent further losses. Here are some of them:
- Contact your bank or financial institution as soon as possible, and report the fraud. They may be able to reverse or stop the transactions, or freeze or close your accounts if they have been compromised.
- If you used a credit card, debit card, or a payment service such as PayPal, contact the provider and dispute the charges. They may have policies or protections that can help you get your money back, or limit your liability.
- If you used a cryptocurrency wallet or exchange, contact the platform and report the fraud. They may be able to trace or recover the funds, or block the scammers’ accounts.
- Keep all evidence of the fraud, such as texts, emails, screenshots, transaction numbers, documents, and URLs. File a complaint with the Federal Trade Commission or the FBI’s Internet Crime Complaint Center. They may be able to investigate the case, or refer it to other agencies or authorities.
- Contact your state attorney general’s office or consumer protection agency, and report the fraud. They may be able to take legal action against the scammers, or provide you with resources or assistance.
- Warn others about the scam, and share your experience on social media, online forums, or review sites. You may be able to prevent others from falling victim to the same scam, or find other victims who can support you or join you in a class action lawsuit.
Conclusion: Stay Vigilant and Aware
Pig butchering is a complex and evolving scam that exploits trust and financial desperation. By educating ourselves and understanding its workings, we can protect ourselves and fight back against this devastating crime. Remember, vigilance and awareness are critical weapons in the fight against financial predators.