FBI Warns Crypto Bankrollers of ‘Pig Butchering’ Scams

The FBI is warning crypto investors to steer clear of social engineering schemes known as Pig Butchering, where victims are offered fictitious returns to encourage additional investments.

The FBI Miami Field Office, in coordination with the Internet Crime Complaint Center (IC3), warns investors that fraudsters establish first contact on various social media or dating applications, either spoofing long lost contacts known to the victim or posing as a potential friend or romantic partner.

Gaining the victim’s trust

The perps are patient and composed, and are willing to spend time gaining the victim's trust. Once trust is established, victims are coached through the purported investment process and ultimately encouraged to make deposits.

“The fake websites/apps allow the victims to track their investments and give the impression they are growing exponentially,” according to the alert. “When the victims attempt to cash out their investments, they are told they need to pay income taxes or additional fees, causing them to lose additional funds.”

Along the way, victims often lose contact with the fraudsters, either because the fraudulent website closes or the fraudster ceases contact with the victim. In any case, victims never retrieve their purported investments.

While some victims are directed to make wire transfers, others are instructed to buy large amounts of prepaid cards. Others report being told to use cryptocurrency ATMs for payment.

“Individual losses related to these schemes ranged from tens of thousands to millions of dollars,” the Bureau says.

Mitigations

If you’re a player in the crypto market, the FBI says to always verify the validity of an investment opportunity from strangers or long-lost contacts and keep your eyes peeled for domain names that impersonate legitimate financial institutions, especially cryptocurrency exchanges.

Also look out for misspelled (spoofed) URLs, suspicious-looking apps posing as investment tools, and opportunities that simply sound too good to be true. The agency says get-rich-quick schemes are a telltale sign that someone is out to get your money.

‘Pig Butchering’ scams on the rise

As the Bureau explained in a previous report this year, the name “Pig Butchering” was chosen to reflect how cybercriminals “feed their victims with promises of romance and riches before cutting them off and taking all their money.” The scheme itself is no novelty, but it now has a new name to go by in the crypto world.

In a September article, Forbes reveals how one person lost a whopping $1 million to Pig Butchering.

If you believe you have fallen victim to this super scam, the FBI says you should immediately file a report with the Internet Crime Complaint Center at www.ic3.gov.