Pig Butchering on the Rise

Imagine a world where trust builds over cozy chats, seemingly innocent exchanges bloom into bonds, and investment tips from new friends glow with promise. Welcome to the deceptive charm of “pig butchering” —an intricate scam in which scammers meticulously build trust with victims over a period of time before leading them to financial slaughter.  

What is Pig Butchering? 

The term refers to the traditional process of fattening a pig before slaughter, aimed at maximizing its value. Adapted from the Chinese term “Sha Zhu Pan,” this metaphor paints a vivid picture of betrayal, where warmth, trust and the allure of romance are exploited for virtual currency scams, leaving victims in a state of financial and emotional ruin. 

How Does it Work? 

Pig butchering scams are a sophisticated blend of elements from romance scams, investment, and virtual currency fraud that involve scammers who first build trust through affection and seemingly genuine relationships over time. These scams usually follow a progression where; 

• The victim receives contact through social media, dating app or a text meant to seem like a wrong number. 
• The scammer builds a relationship, establishing trust and personal ties over time. 
• The scammer recommends a crypto investment, leveraging the trust built from their “relationship” to persuade the victim to invest. 
• Initially, the investment may appear profitable, but eventually, the scammer gains access to the victim’s account and drains it.

These scams, highlighted in a FinCEN’s alert in September, are becoming increasingly prevalent, exploiting social media, dating and messaging apps to weave a facade of legitimacy. The methodical buildup to the scam, disguising its true nature until losses are incurred, underscores the importance of caution in online financial dealings. Recent reports indicate the emergence of “pig butchering kits” being sold online, suggesting a troubling commodification and accessibility of these scams. 

Originating in China and often operated by Southeast Asian crime syndicates, pig butchering is unique in that there is often more than one victim – the scammer and the target – as labor trafficking victims are exploited and forced into perpetrating online scams.  This adds a layer of tragedy to the scams, as individuals coerced into these activities suffer alongside those defrauded. A 2023 FBI alert on labor trafficking underscores the grim reality that these operations often involve trafficked victims. Highlighting the dual victimization within these schemes, the alert sheds light on how individuals are coerced into participating in fraudulent activities, revealing a deeper layer of exploitation beneath the financial fraud. This points to the broader implications of pig butchering scams, emphasizing the need for heightened awareness and action against both financial fraud and human trafficking. 

Global media outlets began reporting on pig butchering scams, which initially targeted men in China, in 2019, but these scams have now evolved into a multibillion-dollar enterprise that involves transnational organized crime groups and significantly impacts victims all over the world.  

In the United States these scams and other forms of virtual currency fraud led to reported losses of $2.6 billion in 2022, a figure that more than doubled from the previous year, and over 3.5 billion in 2023, indicating a distressing upward trend. In 2023, the DOJ seized approximately $112 million in virtual assets linked to these scams with significant seizures traced back to a Binance account registered in Thailand.  

Global Regulatory Response to Pig Butchering Scams 

Global and jurisdictional bodies are actively working to combat pig butchering. The FBI has released warnings and guidelines to help individuals avoid these scams. The EU’s MiCA regulatory framework, set to be enforced this year, aims to protect consumers by holding crypto providers accountable for losses. Similarly, the UK’s Financial Conduct Authority (FCA) has implemented regulations to ensure crypto firms adhere to AML and CFT standards, with a new “Crypto Cell” division announced in January 2023 to specifically address crypto crime, which often involves pig butchering crypto investment scams. U.S authorities have also enhanced regulatory measures and enforcement actions to protect consumers and disrupt criminal networks involved in virtual assets fraud. These efforts are part of a broader initiative to increase security and transparency within the virtual asset marketplace, reflecting a commitment to safeguarding the financial interests of citizens from emerging online threats. 

Identifying Scam Tactics and Enhancing Vigilance   

To protect yourself from the sophisticated “pig butchering“ scams proliferating online, awareness and vigilance are key. Here’s how these scams typically unfold and steps you can take to mitigate the risk: 

Understanding Scammer Tactics

• They may reach out through social media, dating apps, or unexpected text messages. 
• Promises of high returns through “special” app investments are common. 
• Scammers may request access to your accounts or propose joint trading activities. 

Key Mitigation Strategies

• Be cautious of unexpected investment opportunities, particularly in cryptocurrencies. 
• Refrain from sharing personal or financial information online. 
• Conduct thorough checks on investment opportunities that sell “guaranteed” returns. 
• Ensure the legitimacy of websites and apps before use and avoid downloading from dubious sources. 
• Avoid sharing sensitive details with new online acquaintances. 
• Disregard offers that seem too good to be true, especially from unverified sources. 

Adopting these strategies can significantly reduce your vulnerability to these complex fraud schemes. 

Lastly, remember that virtual assets themselves are not the issue; they are simply tools that are often exploited in scams, just as traditional financial instruments. The emergence of pig butchering scams highlights the need for vigilance and education to safeguard against such exploitation, without casting a negative light on the broader virtual assets space. Recognizing the necessity for robust protective measures is key to ensuring the safe use of virtual currencies.