Crypto scams cost investors millions

An old crypto scheme has a new name – and it’s costing investors millions.

So-called “pig slaughtering” is when a fraudster builds up the trust of their victims before eventually pressuring them to deposit more and more of their crypto assets into fake digital wallets or websites controlled by the fraudster.

The name refers to how scammers “feed their victims promises of romance and riches before cutting them off and taking all their money,” according to an FBI report.

And you may have already encountered the latest iteration of this scheme.

“Pig slaughter scammers usually send a message via Whatsapp, text messages or another app like Tinder, as if it were meant for someone else, often with an attractive person’s profile picture,” says Chen Arad, chief operating officer of Solidus Labs, a company that provides tools to help crypto exchanges and institutions prevent market manipulation.

Instead of asking for a large sum of money upfront, the scammers are slowly working to convince their targets to move their cryptocurrency away from legitimate exchanges and onto fake websites controlled by the scammer that look like authentic trading platforms, according to an August alert from Coinbase .

The scheme is particularly effective because it involves a fraudster building up the target’s trust over time, Coinbase reports.

After building that trust, the scammers push their targets to pour more and more of their money into the fake investment platforms, according to the Global Anti-Scam Org, a Singapore-based non-profit that researches cybercrime.

The scammers also find ways to appeal to the target’s emotions, such as asking questions like “Don’t you want enough money for your children?” Jan Santiago, deputy director of the Global Anti-Scam Org, tells CNBC Make It.

Some scammers even give their targets a small amount of money they claim is a “return” to convince them to invest even larger sums of money, Coinbase finds.

But when a victim tries to withdraw their money, they are told that they have to pay a fee before the money can be released. Often the fraudsters simply disappear with the stolen funds, which are almost impossible to recover.

“Crypto and blockchain allow very advanced ways to track stolen funds through risk monitoring firms like ours, but once the funds are lost, there is no guarantee that they will be recovered,” says Arad.

Unfortunately, “pig slaughter” is becoming increasingly popular. In 2021, $429 million was lost to this type of fraud, according to the FBI’s Internet Crime Complaint Center.

But there are ways to protect yourself.

“First, don’t take investment advice from people you meet on Tinder,” says Joshua Crumbaugh, CEO of Phishfirewall and former ethical hacker. “If the fund/currency/etc came to you through any form of social media or unsolicited communication, be very skeptical,” he adds.

You should also be wary of higher-than-average returns on an investment, “especially if they’re able to show you quick returns and you find yourself wanting to invest more money immediately after the initial investment,” warns Crumbaugh.

“When getting involved with crypto, especially for people who are new to the industry, it’s important to remember that high opportunities always come with an equal amount of risk,” says Arad. “Never expect risk-free high returns – that simply do not exist anywhere.”

If you have fallen for this type of scam, don’t be ashamed. “These people are really expert manipulators,” says Santiago. “If you haven’t heard of this type of scam, it’s easy to fall victim.”

If you have been affected by this type of scam, the Global Anti-Scam Org and Solidus Labs offer resources. You can also file a complaint with the FBI’s Internet Crime Complaint Center.

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