How Scammers Make Millions with the “Pig Butchering” Crypto Scam

In this article, we explore a large-scale scam known as “pig butchering,” a term that refers to a sophisticated investment fraud that has cost victims hundreds of thousands or even millions of dollars. The scam is so extensive that even the people carrying it out are often victims themselves. The following is a summary based on a detailed post from the krebsonsecurity blog.

What Is “Pig Butchering”?

“Pig butchering” is a term used by scammers to describe the process of “fattening up” their victims before “slaughtering” them financially. The scheme typically involves fake profiles on dating apps and social networks. Strangers lure people into investing in high-yield cryptocurrency trading platforms. When investors try to withdraw their money, they are hit with huge fake tax bills. Even those who pay these fees never see their money again.

According to an April 2022 warning from the FBI, “Scammers feed their victims promises of romance and wealth before ‘slaughtering’ and taking their money. Scammers monitor dating apps and other social networks in search of victims, and the scale of the fraud is alarming.”

How the Scam Works

Besides dating apps like Tinder, scammers use fake SMS messages about Uber rides or coffee meetings from strangers to spark curiosity. The goal is to get the recipient to respond. Those who reply are asked to continue the conversation on WhatsApp, where a friendly, attractive person of the opposite sex follows a carefully crafted script tailored to each victim.

These WhatsApp conversations can last days or weeks, with scammers chatting about food, hobbies, and sharing photos of luxurious interiors. Only later do they casually mention making money by investing in cryptocurrency. This topic is introduced subtly, making it seem like a natural part of the conversation.

Victims and Their Stories

Erin West, Deputy District Attorney of Santa Clara County, California, says her office has received numerous complaints from victims and law enforcement agencies nationwide. West is part of the REACT task force, which combats complex cyber thefts.

“Scammers have entire scripts ready. If the target is divorced, they say one thing; if it’s a single mother, another. The scale is so huge that I’ve never seen so many victims before. Some are in such emotional distress that they’re even suicidal,” West says. “Victims are often sophisticated and educated people. One was a university professor who lost her husband to COVID and ended up losing her retirement savings. Others work in finance.”

The Fake Platforms

The platforms used by scammers look official and are filled with educational materials about cryptocurrency investing. New users are encouraged to join with more experienced investors and start with small amounts they can afford to lose. Investors see their assets grow, which encourages them to invest more and reach bonus or VIP levels.

“People let their guard down. They think they’re savvy and immune to scams, but they get caught. The scale of deception and psychological manipulation on these platforms is unlike anything I’ve seen before,” says West.

The FBI’s Internet Crime Complaint Center (IC3) received over 4,300 complaints about this scam, with losses exceeding $429 million.

A Real-Life Example

Courtney Nolan, a divorced mother of three, lost over $5 million to the scam. Despite her investment experience, her knowledge of the crypto market was limited. In late 2021, she was contacted by someone on Twitter who followed the same crypto experts as she did. They moved their conversation to WhatsApp, where her new “friend” offered to teach her how to make reliable profits using a trading platform called xtb.com.

He provided over 100 pages of educational materials and agreed to mentor her for a year. Nolan was asked to create an account on xtb-market[.]com, a site nearly identical to the legitimate XTB platform. The site offered various investment packages with returns from 15% to 45% and a generous 7% referral commission, encouraging users to bring in others.

Initially, Nolan and her mentor traded side by side with small investments of $500 to $5,000. As they made profits, she invested larger amounts. She was able to withdraw sums of $10,000 to $30,000 several times. But after investing over $4.5 million in four months, her account was suddenly frozen. She was told she owed nearly $500,000 in taxes. Her mentor cut off all contact, and the website disappeared weeks later.

Who Are the Scammers?

According to a detailed report by Vice, the scam is linked to organized crime groups in Asia. They lure young job seekers to work in call centers, but instead, these recruits are sent to Cambodia and forced into labor. Many are held in Chinese-owned casinos built before the pandemic, which now serve as offices for scam call centers.

Vice reports that there may be tens of thousands of scam centers in cities like Sihanoukville and Phnom Penh, as well as border regions. In April, Thai police reported rescuing 800 Thai citizens from scam centers in Cambodia, with another 1,000 still trapped. One Vietnamese worker estimated that 300 compatriots were held on a single floor of a high-rise building.

At the Victory Paradise Resort alone, there were reportedly 7,000 people, mostly from mainland China, Indonesia, Singapore, and the Philippines. In one complex of 10 high-rises in Sihanoukville, known as the “Chinese Project,” 8,000 to 10,000 people were involved in various scams, generating about $1 billion a year—roughly $300 per worker per day.

How to Avoid the Scam

Here are some common signs of the “pig butchering” scam:

• Scammers often operate on dating apps but can start the scheme through any type of communication, including SMS.
• In almost all documented cases, victims are quickly moved to WhatsApp for further conversation.
• Scammers always avoid video chats.
• No matter how long the conversation lasts, it eventually shifts to cryptocurrency and promises of easy money.

FBI Tips to Avoid Crypto Scams:

• Never send money, trade, or invest based on advice from someone you’ve only met online.
• Don’t discuss your financial situation with unknown or untrusted people.
• Never provide your bank information, Social Security number, ID, passport, or any confidential information to anyone online or on unfamiliar websites.
• If an online investment or trading site promises incredible returns, it’s probably a scam.
• Be wary of people who claim to have exclusive investment opportunities and urge you to act quickly.

The article also highlights how difficult it is to help victims. While U.S. authorities have had some success freezing scammers’ crypto wallets, the chances of recovering lost funds are slim. The best defense is to remember the rules above and stay vigilant, no matter where you are.