Pig butchering scam

A pig butchering scam is a type of long-term confidence trick 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. The scammer builds trust with the victim through online communication, subsequently persuading them to invest in a fraudulent cryptocurrency scheme. Frequently, the victim is induced to make further payments before realizing they have fallen prey to fraud. The "butchering" or "slaughtering" of the victim transpires when their assets or funds are stolen by the criminal(s), leading to significant financial and emotional distress for the victim.

This type of fraud originated in Southeast Asia. Perpetrators are typically themselves victims of a fraud factory, lured from abroad under false pretenses and then forced to commit the fraud by organised crime gangs. Those gangs prevent them from leaving and threaten them with violence if they disobey orders. 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.

Pig butchering scams 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. Victims are matched with fake dating profiles and then socially engineered into developing a relationship with the perpetrator, who convinces them to invest in cryptocurrency from websites controlled by the scammers. When sufficient money has been sent, the perpetrator breaks off contact and vanishes. One group profiled in The New York Times focused on (preferably married) Chinese women between the ages of 30 and 50.

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. This trend points to the increasing sophistication of cryptocurrency scammers and the severe financial impact on victims.

Additionally, an investigation into the human aspect of these scams reveals a pattern of coercion and exploitation. Many low-level operators of these scams are often victims themselves, coerced into participating in these crimes under the guise of employment opportunities, only to find themselves trapped and compelled to scam others. This adds a critical dimension to the understanding of pig butchering scams, extending beyond financial loss to encompass human trafficking and exploitation.

The global impact, significant financial losses, and human rights issues associated with pig butchering scams highlight the urgent need for increased awareness, prevention measures, and international cooperation to combat this multifaceted problem.

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.

Pig butchering scams gained international momentum through the exploitation of online dating apps and social media platforms. 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.

The scams evolved significantly with the integration of sophisticated techniques, including the creation of bogus 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.

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.
2. 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.
3. 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.
4. 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.

Also emerging are tactics like group chats and social engineering, where scammers create fake investment groups to identify and target potential victims more efficiently. These groups often contain fake profiles to simulate authenticity and community. The scammers then transition to one-on-one chats, often masquerading as secretaries or assistants, to guide the victim through the investment process.

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 underscores the impact of these scams, with millions of dollars lost by victims, and emphasizes the importance of caution and vigilance in online investments.

Countermeasures

An important aspect of countering pig butchering scams involves the possibility of 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.

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.

One of the major challenges in this endeavor is the pseudo-anonymous nature of cryptocurrencies like Bitcoin. While transaction details are publicly recorded on the blockchain, linking them to real-world identities can be challenging without additional information. This is where cyber intelligence techniques come into play, gathering further clues like IP addresses or email addresses associated with the transactions.

Despite these challenges, successful tracing of stolen cryptocurrencies can lead to the identification of the scammers and recovery of the assets. It requires a combination of technical expertise in blockchain technology, understanding of cybersecurity, and familiarity with legal processes for asset recovery. These efforts are crucial for both bringing scammers to justice and restoring funds to their rightful owners.

Therefore, while challenging, tracing stolen cryptocurrencies represents a vital countermeasure against pig butchering scams, offering victims a potential avenue for recovering their lost assets and deterring future scams.

Consequences

The consequences of falling victim to a pig butchering scam are both financially and emotionally devastating. These scams, which typically combine elements of romance and investment fraud, 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.

In popular culture

The public is increasingly aware of pig butchering scams and this is reflected 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.

See also

• Romance scam
• Cybercrime
• Internet fraud

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. 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