The Federal Bureau of Investigation (FBI) has warned users of financial products, including crypto users, about the increasing incidents of “pig slaughtering” online fraud. It has warned victims to be aware of the scam to avoid falling prey to it and losing their money.
US Secret Service special agent Shawn Bradstreet has said in an interview with Bitcoin.com“Once they [the victims] see how easy it is to invest, they see an increase in their screen account, and then they end up investing their entire savings in a matter of days.”
Mridul Gupta, COO, CoinDCX, a crypto exchange, said that before investing in crypto assets, “investors need to familiarize themselves with some key elements such as choosing a compliant exchange that follows proper KYC verification methods. To identify a reliable exchange, one must evaluate the audit information of the stock exchange as they help understand the financial health of a company.”
What is going on in this cyber scam?
Indians are no outsiders to this kind of fraud. A resident of Ladakh (name withheld) had also fallen victim to this pig slaughter scam about six months ago and it involved a lady from Hong Kong. He had lost savings worth around Rs 90 lakh in this scam.
Karmesh Gupta, co-founder and CEO, WiJungle, a Haryana-based cyber security company, said the “pig slaughtering” cyber scam was pronounced four years ago in China. Getting the money across borders was difficult in the past because it used to be a common online scam. But today, crypto gives you a chance to move your money across borders, from one geography to another.
Vijay Pravin Maharajan, founder and CEO, bitsCrunch, a Germany-based Blockchain analytics company, says that pork slaughter scam is a new name given to an old scam, which used to occur with financial products, and has now found its way into in the crypto world.
According to Satnam Narang, senior staff research engineer, Tenable, a US-based cybersecurity solutions company, this scam involves fraudsters using various dating apps, instant messaging apps and others to lure users in by making false promises and assurances about a relationship.
After gaining a user’s trust, they redirect users to invest in a fake product website as a fake cryptocurrency website, or other types of fake financial platforms, such as a fake exchange. Then these fraudsters encourage the user to make investments in that exchange and the front-end interface of the exchange also shows the growth of the money invested. But when the user tries to withdraw the money, it doesn’t happen for some reason and the user ends up getting scammed.
Maharajan said that in the crypto world, instead of asking for money upfront, scammers gradually convince their target to move the cryptocurrency away from legitimate wallets or exchanges to sites that are fraudulent and controlled by the scammer.
“These websites are designed to look like they are authentic trading platforms,” adds Maharajan.
The user from Ladakh also faced the same issue. A girl from Hong Kong contacted him and told him about a crypto exchange platform where he could potentially make millions.
“I could see my money growing by 2-3 percent within hours of my investment and then I would invest more money every week and later every day too. It became a habit to invest every day and I was waiting for my money to grow big so that I could finally withdraw it one day, says the user from Ladakh.
Gupta of WiJungle said the motive is to get you comfortable for a free and casual conversation. At the end of the day they lead the conversation to an investment, this process usually takes a week or more than that. The person keeps their patience so you don’t feel like it’s a scam. They will try to understand your current investments, stocks, mutual funds and finally about crypto which is the key aspect.
But when he tried to withdraw the money, he was told that the crypto exchange will deduct tax at 30 percent and deposit it to the Indian tax authorities, so he has to pay the tax money in advance before withdrawing the profit. .
“I paid this 30 percent tax on my winnings as well, but even after that they wouldn’t let me withdraw my money,” he says.
This supposed crypto exchange did not ask for his PAN card details or Aadhaar, or any kind of know-your-customer (KYC) information. Yet it claimed to deposit income tax on the user’s behalf with the Income Tax Department in India.
Gupta of CoinDCX pointed out that every crypto investor must know that the 30 percent tax is paid by the investor as part of his annual tax return and is paid by the investor directly. The 30 percent tax is not deducted by the stock exchange, while the 1 percent TDS is deducted by the stock exchange and paid to the government.
Gupta of WiJungle advised users that the only way to save yourself is to simply ignore such texts. Ignore having any kind of financial transactions with people you have never met or are complete strangers. Never trust strangers for any kind of investment advice. Being careful can save you from being scammed. Trust, but verify every piece of information someone gives you. The most important thing is to avoid such messages in the beginning and conversations with strangers that can later lead to financial problems.
Red flags to watch out for
Pig slaughter is a long-running scam: The term itself means that pigs are fed, fattened and then slaughtered. Likewise, the scammers don’t do a one-off big scam with each user once. They slowly build a rapport with the victim and then take small steps to develop the relationship.
“The phenomenon of pig slaughtering is part of a long con, so it may not be immediately obvious to the victim that they are being fed lies to develop a fake relationship and gain their trust. So users should be very careful when they are contacted out of the blue in various dating, chat messaging apps and others by strangers, says Narang.
Frequent show-off can make you a target: These scammers scan various dating and social media sites for potential targets. Narang says one of the key metrics they use to sort out targets is to see which users are talking about the success of traditional or alternative investments, or others like cryptocurrency, or who have a lot of interest in those topics.
So if you get an investment offer that sounds too good to be true, don’t become gullible and fall prey to it. Instead, leave it and report to the authorities.
Love bombing right from the start: One of the signs that you are being scammed is when you get the love bomb, i.e. when the scammer says extremely nice things about you, even though you have barely known each other.
Pune police last year arrested a 27-year-old woman who used to do this kind of scam. She used to create multiple dating profiles of her and love bombers and then ask them to come to Pune where she would rob them.
Krishna Prakash, Commissioner of Police (CP) of Pimpri-Chinchwad Commissionerate of Police, said Mumbai mirror that the woman previously worked in a telecoms company.
“After the lockdown, she didn’t have a job. Over the past year, she robbed 16 men in Pune and Pimpri-Chinchwad through dating apps. The police have seized a total amount of Rs 15.25 lakh in cash from the accused, besides 289 grams of gold and mobile phones. She planned to target men and women who are not residents of Pune but from other states,” the newspaper quoted Prakash as saying.
