Romance scams, the act of creating fake profiles on dating apps to swindle money from victims, have found their way into the crypto world.
One of these has the rather unflattering term ‘Pig butchering’ because the victim is ‘fattened’ through flattery and praise, then enticed to first send a little crypto, and then more, into a fraudulent investment scheme. The cybercriminal finally pulls the plug and disappears, ‘butchering’ the victim’s finances.
The scam typically occurs on dating sites and apps, targeting the lonely and emotionally vulnerable. It is also found on social media sites.
Pig butchering began in China in 2019, according to an announcement by the Federal Bureau of Investigation (FBI). It is now “alarmingly popular” in the US, says the law enforcement agency, with at least $439 million (R7.1 billion) swindled through pig butchering in 2021.
The ring of cybercriminals responsible for the recent uptick in cases uses translation software to target western victims.
One San Francisco-based man lost $1.2 million (R19.4 million) – 30 years’ worth of savings including his daughter’s education fund – after being targeted by a scammer who preyed on his vulnerability following the loss of his father.
Cases of pig butchering in California have tripled this year, reports ABC7 News, and seem to be targeting the Asian community specifically.
In January 2021, Interpol issued a Purple Notice – a type of informative brief detailing criminal “modi operandi, procedures, objects, devices or hiding places” – detailing how cybercriminals were targeting emotionally vulnerable people on dating sites.
SA’s stunning losses to catfishing, romance scams’ kissing cousin
Almost synonymous with romance scams is ‘catfishing’, the act of pretending to be someone else online in order to commit fraud. The term is more embracive than romance scams or pig butchering because it can include impersonating a friend or family member.
A study by Techshielder based on data from 2020 revealed the following alarming facts about South Africa’s predilection for falling prey to this type of scam:
- SA is one of the top 20 countries where people are most likely to fall victim to catfishing scams;
- The average financial loss per scammed person in SA is a stunning £35 433 (R717 811), the second-highest in the world; and
- SA suffered the seventh highest total losses in the world in 2020 – £6.7 million (R136.4 million).
Fake investment apps make thievery easier
A Silicon Valley software developer referred to as “R” lost $1.3 million (R21 million) after a scammer purportedly named Zhang approached her on LinkedIn, reports ABC7 News.
Zhang suggested a fake trading app that looked legitimate, and convinced her to make three instalments of $65 000 into the trading app. The app soon showed that “R” had apparently made a 20% return. So she emptied her retirement account into it – all $900 000 (R14.6 million) of it – followed by another $400 000 (R6.5 million) she borrowed from her husband. And then promptly lost it all.
The use of legitimate-looking apps is yet another problem the FBI is facing. It identified 244 victims who were defrauded of $42.7 million (R692 million) through the use of fake cryptocurrency investment apps, according to an FBI warning issued in July.
In one heist, cybercriminals convinced 28 investors to download an app that used the logo and name of a real US financial institution and then deposit crypto into it.
When 13 of the 28 investors attempted to withdraw their funds, they received an email saying they had to pay tax before being able to do so. Even after paying the purported tax, the victims still could not withdraw their funds.
In total, they were hustled out of $3.7 million (R60 million).
A second hoax operated under the fictitious company name of YiBit. It followed the same pattern. Victims deposited cryptocurrency into the app, but when they tried to withdraw their funds were told to pay taxes. Ultimately, they could not withdraw their funds.
Pig butchery, a step-by-step guide
An in-depth analysis of pig butchering by blockchain analysis company Elliptic explains how the scam usually works.
The connection with the victim is usually nurtured for weeks or months before the subject of crypto is brought up.
The method of bringing it up is not always entirely romantic. Sometimes ‘sexploitation’ is involved – a practice where the cybercriminal threatens to expose sensitive photos or embarrassing details of a sexual nature, such as racy text messages, if a certain amount of crypto is not transferred.
But it is most often the promise of a ‘great opportunity’ that gets victims to start rolling with the scam.
The blog reiterates the trend of scammers targeting people in or from Asia, and links to an 80-page script purportedly used by pig butchers to swindle their victims.
The script has the ominous title of “Latest Strategy for Killing Pigs”.
How to stay safe
The Elliptic analysis points out that 27% of dating profiles are fake and that “batches of photos which can be used for romance scams” can be snatched up for as little as $20 (R324) on the dark web.
It recommends that dating app users be wary of people who bring up love too early in the relationship or introduce cryptocurrency and then promise to be a mentor regarding it.
Scammers also push the idea of wealth creation and following your dreams, urging victims to dream big and aspire to greater things.
Scammers will often avoid video or voice calls.
The FBI warns investors to be wary of unsolicited requests to download investment apps, and to check whether the company behind an app actually exists.
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R Paulo Delgado is a crypto writer with an eye for the bizarre and the human stories behind the always fascinating leaps and stumbles of this new asset class.
