Claiming to “work closely with law enforcement partners across the globe to protect customers from an array of targeted cyber attacks,” Nasdaq-listed crypto exchange Coinbase has released a blog post on the “pig butchering” crypto scam, calling it “particularly effective because it relies on a scammer building trust with their victim sometimes over a long time period of weeks or months.”
According to recent media reports, U.S. authorities including the Federal Bureau of Investigation (FBI) and Lakewood Police, where cases have been filed, have warned against the rising popularity of the scam.
The scam’s name comes from the Chinese term “Sha Zhu Pan.” According to the FBI,
“The fraud is named for the way scammers feed their victims with promises of romance and riches before cutting them off and taking all their money,” the FBI said.
Scam Usually Starts on Social Media or Dating Sites Like LinkedIn and Tinder
Furthermore, a Lakewood police officer explained that “the pig butchering scam usually starts on social media or dating sites like LinkedIn and Tinder, where the scammer finds and convinces the victim to hand over some funds.”
“The scammer then puts the money into a crypto account, which appears to grow in value, making the victim want to add more funds to the account,” he added. “The scammer then disappears with a large amount of the victim’s cryptocurrency.”
According to Forbes, romance scams have skyrocketed to $547m a year.
Talking about the rising complaints of the scam, Erin West, a veteran prosecutor with the Santa Clara County District Attorney’s Office said, “Over the past month, we have become flooded with pig butchering cases. Not just [victims] local to Santa Clara county but nationwide and even worldwide.”
On the Flipside
Last month, a victim of the scam, who met “an unknown suspect” on a dating website, and eventually was tricked into investing over $243,000 into a fake cryptocurrency exchange, saw a recovery of $243,000 by Binance.
Some victims even receive a small amount of money that is claimed to be “returns” on their investment to entice them to invest even larger sums.
Why You Should Care
When a defrauded victim tries to withdraw funds from the site, they are then told they owe a tax payment or service fee before their funds will be released in an effort to further extort them for money, explained Coinbase.