The Federal Bureau of Investigation (FBI) warns of a rise in ‘Pig Butchering’ cryptocurrency scams used to steal ever-increasing amounts of crypto from unsuspecting investors.
The warning was issued as a Private Industry Notification from the FBI Miami Field Office in coordination with the Internet Crime Complaint Center (IC3) yesterday to raise awareness among cryptocurrency investors who are increasingly being targeted by these types of scams.
Pig Butchering is a relatively new social engineering scam where fraudsters contact people (the “Pigs”) on social media and build trust by engaging in long-term communication, establishing the idea of a fabricated friendship or romantic partnership. Sometimes, the scammers impersonate real friends of the target.
At some point, the fraudsters propose that the victim invests in cryptocurrency on phony platforms that aren’t linked to an actual cryptocurrency exchange or market.
Victims visiting these fake investment dashboards see massive returns, thinking their investment is already generating profit. The fake investment returns prime the target for the next stage of the scam, which is to press them to invest ever-increasing amounts and not withdraw anything.
At some point, the victim attempts to cash out on their investments, which is when they are told that they need to pay income taxes first, additional processing fees, international transaction costs, etc.
Eventually, the fraudster stops communication and shuts down the fake crypto exchange, or the victim gives up after realizing they have been scammed. Unfortunately, this can be months into the scam with the victim already giving huge amounts of funds to the fraudsters ranging from thousands to millions of dollars.
“Many victims report being directed to make wire transfers to overseas accounts or purchase large amounts of prepaid cards,” explains the FBI notice.
“The use of cryptocurrency and cryptocurrency ATMs is also an emerging method of payment. Individual losses related to these schemes ranged from tens of thousands to millions of dollars.”
Forbes recently reported on a 52-year-old man from San Francisco who lost $1 million to a Pig Butchering scam after being contacted by fraudsters pretending to be an old colleague.
Spot the scams early
Due to the rising growth of these types of scams and the significant financial losses victims can suffer, it’s crucial to recognize them as early as possible.
The FBI has listed the following characteristics of “Pig Butchering” that people should consider as red flags:
- You are contacted by a long-lost contact or a stranger on social media.
- The URL of the investment platform doesn’t match the official website of a popular cryptocurrency market/exchange but is very similar (typo-squatting).
- The investment app you have downloaded generates warnings of being “untrusted” when launched on Windows, or your anti-virus marks it as potentially dangerous.
- The investment opportunity sounds too good to be true.
People who suspect they may have been victims of “Pig Butchering” are urged to report it to the crime complaint center at ic3.gov, including as many details as possible, to help law enforcement track down the scammers.