Crypto scam: Inside the billion-dollar ‘pig-butchering’ industry
A 71-year-old man living in California says he lost about $2.7 million last year after falling prey to a crypto investment scam. Funds linked to that scam reached an account in the name of Chinese businessman Wang Yicheng, Reuters found. REUTERS/Carlos Barria
At a Thai police headquarters in October 2022, Chinese businessman Wang Yicheng congratulated one of Bangkok’s most senior cybercrime investigators on his recent promotion, presenting the official with a large bouquet of flowers wrapped in red paper and a bow. Wang, the vice-president of a local Chinese trade group, wished the new cybercrime investigator “smooth work and new achievements”, according to the group’s website, which displays photographs of the event.
Over the past two years, Wang has forged relationships with members of Thailand’s law enforcement and political elite, the trade group’s online posts show. During that time, a cryptocurrency account registered in Wang’s name was receiving millions of dollars linked to a type of cryptocurrency investment scam known as pig butchering, a Reuters investigation has found. In total, crypto worth more than US$90 million (S$120 million) flowed into the account between January 2021 and November 2022. The victim of one of the scams was a 71-year-old California man. According to blockchain analysis company Coinfirm, he sent money to crypto wallets that channelled more than US$100,000 into the account in Wang’s name.
The man’s family told Reuters he lost about US$2.7 million, his life savings, after falling prey to someone claiming to be an attractive young woman called Emma. The previously unreported transactions provide rare insight into the finances of pig-butchering scams, which involve engaging unsuspecting people online. Scammers cultivate trust and then persuade victims to invest in fraudulent crypto schemes, sometimes via fake websites built to look like legitimate trading platforms. Sometimes the targets initially receive real returns to trick them into believing the scheme is legitimate. Such scams have drawn intensifying scrutiny from global law enforcement over the past year, but little is publicly known about the people behind them.
How 'pig-butchering' scams have emerged as a billion-dollar crypto industry
Crypto fraud has emerged as a multi-billion-dollar criminal speciality that has entrapped victims around the world. PHOTO: The Straits Times
Such scams have drawn intensifying scrutiny from global law enforcement over the past year, but little is publicly known about the people behind them. Wang, who is 41 according to the account registration documents, didn’t respond to detailed questions for this article. Neither did the Thai government, the Thai police or the Bangkok-based trade group Wang represented, the Thai-Asia Economic Exchange Trade Association. Some aspects of the pig-butchering operation remain murky. Lisa Wolk, a blockchain intelligence analyst at TRM, said the crypto account in Wang’s name “is a node in a money laundering network and not necessarily the ultimate recipient of funds.” Reuters was unable to determine whether anyone else benefited from the account or used Wang’s identity to open it.
In January, agents from the U.S. Federal Bureau of Investigation and the U.S. Secret Service attended a briefing about cyber fraud, according to Erin West, a California prosecutor specializing in cybercrime who participated. A 72-page presentation prepared for the attendees, which Reuters reviewed, provides details on cyber scams operated from Southeast Asia and cites Wang as among alleged beneficiaries. The presentation depicts money flowing into a crypto wallet identified as belonging to Wang, notes his role at the Thai-Asia association, and includes a picture of his identity card and other photos of him. The FBI and Secret Service declined to comment on the briefing, or on whether Wang was part of any investigation. The briefing was given by the Global Anti-Scam Organisation, a U.S. non-profit that advocates for fraud victims and investigates cases. The crypto account registered to Wang was held at Binance, the world’s largest crypto exchange, according to three blockchain analysis firms. Asked about the account, Binance spokesperson Jessica Jung declined to comment on individual users or Reuters’ findings. In an August post on its website, the company said the number of reports of pig-butchering scams it had received this year was double that of 2022, an increase it attributed to an influx of inexperienced crypto investors and scammers looking to exploit them.
Crypto fraud has emerged as a multibillion-dollar criminal specialty that has entrapped victims around the world. In the United States alone, victims reported losses of $2.6 billion from pig butchering and other crypto fraud last year, more than double the previous year, according to the FBI. The true scale of the losses is unknown because victims are often too embarrassed to report crimes to authorities. In April, the U.S. Department of Justice said it seized about $112 million worth of crypto linked to pig-butchering scams, without identifying suspects. A warrant that resulted in the seizure of more than half that amount specified a Binance account registered in Thailand.
The pig-butchering scam: Con artists who come for your heart and wallet
Fraudsters spend months cultivating a relationship with the victims before urging them to invest in bogus investment schemes. PHOTO: PEXELS
Victims in Singapore have lost more money to investment scams than any other ruse in the last three years. It hit a record high last year, with $190.9 million stolen in such scams, more than five times the $36.9 million lost in 2019. A recent variant that has appeared here is the pig-butchering scam.
Fraudsters spend months cultivating a relationship with the victims before urging them to invest in bogus investment schemes. According to news reports, pig-butchering scams started in China in 2016. Back then, scammers groomed their victims to place bets on fake gambling websites. The Chinese term "sha zhu pan" - it means to fatten a pig before slaughtering it - was coined by the perpetrators themselves to describe their scam. The Chinese government cracked down on illegal betting in 2018. But fraudsters then targeted Chinese speakers in South-east Asia.
As the demographic expanded to include Europe and the United States, scam tactics evolved to keep abreast with the growing popularity of cryptocurrency investments. In response to queries, the Singapore Police Force said victims here ended up transferring money to banks predominantly in China, including Hong Kong. "They were asked to pay administrative fees, security fees or taxes in order to reap profits. In many cases, victims earned a profit in the initial stage, leading them to believe that the investment is legitimate and lucrative," the police told The Sunday Times. "Once larger amounts of monies were deposited into the designated accounts, the scammers became uncontactable." There is no official data on the number of pig-butchering scams busted in Singapore each year. According to the Global Anti-Scam Organisation, a volunteer-driven advocacy group which includes Singaporean members, most victims of pig-butchering scams had emptied their savings account and many even ended up in debt.
What is a ‘pig-butchering’ scam – and why is it on the rise?
Chef Alexandr Gutu, from Moldova, has lived in the UK since 2016. He was working two jobs to try and save a deposit for a house. By the end of 2022 he’d saved up £42,000. Around the same time, he set up a profile on Tinder, hoping to find love. Alex, 33, was soon matched with Kristine and they quickly grew close, messaging each other for several weeks. “We had a really nice chat about the future, about plans, kids,” he told Rip Off Britain. “I really felt I can trust this person.”
When Alex shared his plans to buy a house, Kristine said her uncle was a professional cryptocurrency trader who could help him grow his savings pot. They were introduced, and Kristine’s ‘uncle’ soon won Alex’s trust. Alex first invested £850, followed by bigger sums as he saw his investment growing. Alex’s online relationship with Kristine was also blooming, as they frequently messaged each other off the Tinder platform. “I was feeling really happy,” Alex told Rip Off Britain. “I was thinking after a long time, I found a really good girl who can potentially be my wife and we can create a family.” Alex had deposited £40,000 into crypto accounts, but when he asked to withdraw some of it Kristine’s ‘uncle’ went silent. He and Kristine both blocked Alex’s phone number, and Kristine’s profile disappeared from Tinder, leaving him with no way of contacting her. Reality hit, as Alex realised he’d been the victim of a long and cruel scam.
Pig butchering scam explained: Everything you need to know
Cryptocurrency scams are on the rise. In 2022, $5.9 billion was lost, according to the Chainalysis 2023 Crypto Crime Report. One style of scam mixes romance and friendship with investment scheming. The name of this scam, pig butchering, gets its name from gaining the trust of the victim before stealing the money. An example of a pig butchering scam made headlines in 2022 when a man lost $1 million after initial contact with a scammer pretending to be an old colleague on WhatsApp.
What is a pig butchering scam? The pig butchering scam, also known as a romance scam, is a long-term fraud that combines investment schemes, romance scams and cryptocurrency fraud. This scam originated in Southeast Asia, and the name originates from the Chinese phrase "Shāz Hū Pán," meaning pig butchering. A ring of cryptocurrency scammers search dating and social media sites for victims. The scammer typically creates a fake account and reaches out to potential victims through sites such as Tinder or WhatsApp. The goal is to become this victim's "lover" or "friend" through cordial discussions. The analogy comes from gaining trust in the victim -- fattening up the pig -- then stealing cryptocurrency or money -- the butchering. This scam can happen with a romance scam on a dating app. The scam may also start as a text from a wrong number or a direct message on social media. The scammer may even pose as a long-lost contact to the victim.
‘Pig-Butchering Scams’: What Are They And How Do You Protect Yourself?
You’d fund a “sure thing” investment in cryptocurrency if a stranger walked up and suggested it, right? “No way, no how,” you say. But what if a new financial advisor contacted you on LinkedIn, or a Facebook friend mentioned an appealing opportunity to bulk up your bank account?
The line between the laughably ridiculous con and a savvy, unexpected fleecing can blur quickly these days. This is especially true when it comes to “pig butchering” scams, expertly concocted efforts that have filched millions from unsuspecting victims. Scammers draw in the victim—that is, “fatten the pig”—with bogus returns until it’s time to move in for the kill.
The FBI issued a warning about this investment fraud trend in October 2022. The next month, the Justice Department seized seven domains running pig butchering schemes that it said stole more than $10 million from victims.
What Is a Pig Butchering Scam?
DIGITAL SWINDLES LIKE business email compromises and romance scams generate billions of dollars for criminals. And they all start with a little bit of “social engineering” to trick a victim into doing something disadvantageous, whether that's trusting someone they shouldn't or sending money into the void. Now, a new variation of these schemes, known as “pig butchering,” is on the rise, ensnaring unsuspecting targets to steal all of their money and operating at a massive scale thanks in large part to forced labor.
Pig butchering scams originated in China, where they came to be known by the Chinese version of the phrase shāzhūpán because of an approach in which attackers essentially fatten victims up and then take everything they’ve got. These scams are typically cryptocurrency schemes, though they can involve other types of financial trading as well. Scammers cold-contact people on SMS texting or other social media, dating, and communication platforms. Often they’ll simply say “Hi” or something like “Hey Josh, it was fun catching up last week!” If the recipient responds to say that the attacker has the wrong number, the scammer seizes the opportunity to strike up a conversation and guide the victim toward feeling like they’ve hit it off with a new friend. After establishing a rapport, the attacker will introduce the idea that they have been making a lot of money in cryptocurrency investing and suggest the target consider getting involved while they can.
Scammers cold-contact people on SMS texting or other social media, dating, and communication platforms. Often they’ll simply say “Hi” or something like “Hey Josh, it was fun catching up last week!” If the recipient responds to say that the attacker has the wrong number, the scammer seizes the opportunity to strike up a conversation and guide the victim toward feeling like they’ve hit it off with a new friend. After establishing a rapport, the attacker will introduce the idea that they have been making a lot of money in cryptocurrency investing and suggest the target consider getting involved while they can. Next, the scammer gets the target set up with a malicious app or web platform that appears trustworthy and may even impersonate the platforms of legitimate financial institutions. Once inside the portal, victims can often see curated real-time market data meant to show the potential of the investment. And once the target funds their “investment account,” they can start watching their balance “grow.” Crafting the malicious financial platforms to look legitimate and refined is a hallmark of pig butchering scams, as are other touches that add verisimilitude, like letting victims do a video call with their new “friend” or allowing them to withdraw a little bit of money from the platform to reassure them. The latter is a tactic that scammers also use in traditional Ponzi schemes.
'Pig butchering': Former romance scammer reveals tactics
In recent years, people around the world have lost hundreds of millions of dollars to online romance scams.
One of the most lucrative of these, being run by criminal gangs across South East Asia, is called the “pig butchering romance scam”. The scammers refer to their victims as pigs, whom they fatten up to be "butchered" - or conned, out of as much money as possible.
A BBC World Service investigation has spoken to former insiders, who reveal the brutal conditions facing many of those working as scammers and the sophisticated techniques that are used.
Most victims of pig-butchering scams in S'pore are professionals between 30 and 40 years old
The Global Anti-Scam Organisation said that around 70 per cent of victims here are women. ST PHOTO: THADDEUS ANG
The non-profit Global Anti-Scam Organisation (Gaso) currently has around 60 members in its Singapore chapter whose losses total $10.7 million. It was formed in May last year after victims of pig-butchering scams came together, and has members from all over the world, including Europe, the United States, Australia and New Zealand. The organisation said around 70 per cent of victims here are women and 30 per cent are men. The majority of victims are professionals between 30 and 40 years old, and less than 20 per cent are married.
Their occupations range from commercial pilot to banker to data scientist to accountant. The largest loss so far is $2.2 million, while the smallest amount lost was $3,000. A spokesman for Gaso said that scams are typically run by Chinese criminal syndicates. "These are not lone wolves, it is a huge production, where there are people scouring social media platforms for their next victim; people on the IT side managing investments; and others posing as customer service officers for these fake platforms," said the spokesman. "These are not fast scams either, these are insidious psychological scams, where victims are groomed for months," she said, adding that they create the illusion that they are real people by sharing images and videos of other people that are purchased for as little as US$4 (S$5.40).
"They have hundreds of photos ready from this person's life - whether it is selfies in the gym, preparing a meal, or videos of them doing things in their daily life." The complexity of the scam extends to their communication with the victim. "When communicating with them, they reply so quickly that you don't even have time to question it... when in fact you could be talking to five to six people at a time because they have a separate group chat helping them answer any questions, or working on responses," added the spokesman.
DEEPFAKE VIDEO OF PM LEE PROMOTING SOME INVESTMENT SCAMS
Prime Minister (PM) Lee Hsien Loong appears to be promoting a crypto-trading video on the Beijing-based news outlet China Global Television Network (CGTN). Yes, PM Lee seems to be discussing the benefits of a hands-free crypto trading platform, which boasts the ability to compute algorithms, analyse market trends, make strategic investment decisions, and execute trades—all autonomously, without any manual input from the user.
On 29 Dec, PM Lee shared a recent deepfake video that has been circulating online. Elaborating on the type of scam involved, PM Lee explained that scammers employ AI (artificial intelligence) technology to mimic our voices and images. They transform real footage of us, taken from official events, into very convincing but entirely bogus videos of us purportedly saying things we have never said. PM Lee urged people not to respond to such scam videos, which promise guaranteed returns on investments.
DEEPFAKE VIDEO OF DPM LAWRENCE WONG SELLING SOME INVESTMENT SCAM
Deepfakes are media that have been altered by AI to look or sound like someone. In the video, DPM Wong’s mouth is altered to synchronise with a fake voiceover that sounds like him. Yes, the voiceover mimics the pitch and intonation of DPM Wong’s actual voice. Don’t believe me? You can watch the deepfake video here.
Notably, the video was made from modified footage of DPM Wong giving an interview recorded by The Straits Times. The deepfake video promotes an investment scam, even using terms reminiscent of a DPM speech, like “my dear Singaporeans”.
List of recommended antivirus apps released by CSA as mobile security threats rise
For the first time, Singapore's cyber-security watchdog has released a list of recommended antivirus apps, with features such as malware and phishing detection, amid mounting mobile security threats.
The move is part of the latest national campaign by the Cyber Security Agency of Singapore (CSA) launched on Saturday (Sept 30). Besides encouraging the use of antivirus tools and the scam-busting app ScamShield, the campaign urges the public to enable two-factor authentication and use strong passwords, stay alert to phishing scams, and update their software promptly.
CSA listed seven recommended antivirus apps each for Android and iOS devices. The apps, which come in free and paid versions.
Android:
- Avast Antivirus and Security - free
- AVG Antivirus and Security - free
- Kaspersky Antivirus and VPN - paid
- Lookout Security and Antivirus - paid
- McAfee Security: VPN Antivirus - paid
- Mobile Security and Antivirus (Trend Micro) - paid
- Norton360 Antivirus and Security - paid
iOS:
- Avast Security and Privacy - free
- AVG Mobile Security - free
- Kaspersky: VPN and Antivirus - paid
- Lookout - Mobile Data Security - paid
- McAfee Security: Privacy and VPN - paid
- Norton360 Security and VPN - paid
- TM Mobile Security - paid
How You can Avoid being Scammed
Scams have been increasing of late. Here’s how to stay safe
Ever received emails from “royals” seeking help to transfer money out of their country in exchange for a percentage of the loot? Or phone calls informing that you’ve won a seven-figure overseas lottery and the only way to receive the payout is by providing your banking details? These are just some examples of classic scams that have been around since mobile technology became a part of our everyday life.
Scammers, though, have been evolving in recent years, becoming sophisticated cons who not only target individuals but businesses and organisations as well. The first half of 2020 saw the number of scams in Singapore jump by 140 per cent compared to 2019. More troublingly, a survey by the Home Team Behavioural Sciences Centre found that 45 per cent of scam victims reported being scammed more than once. According to the Singapore Police Force, last year saw a whopping $201 million lost to scammers, much of it online as Singaporeans turned to websites and apps to carry out activities like banking and buying groceries due to the COVID-19 pandemic. Scammers have also begun to target people working from home through robocalls, as well as seniors who are unfamiliar with the Internet.
The rising number of scam victims is testament to the increasing psychological sophistication of scammers’ tactics in crafting false proof, impersonating the victim’s close friends and using the victim’s shame about possibly falling for a scam to continue extracting money from them. Romance scammers are especially adept at identifying victims who are lonely, vulnerable and easily manipulated — a group that is increasing in size worldwide, due to COVID-19’s impact on social lives. Ensure your safety and that of others by familiarising yourself with common methods of fraud. Here are the top 10 scams in Singapore (in no particular order):
- E-COMMERCE
- SOCIAL MEDIA IMPERSONATION
- INTERNET LOVE
- CREDIT-FOR-SEX
- CHINESE OFFICIALS IMPERSONATION
- TECH SUPPORT
- BANKING-RELATED PHISHING
- NON-BANKING-RELATED PHISHING
- LOANS
- INVESTMENT
Spate of Online Scams
She didn't just lose her money in this encounter - she lost her faith in humanity as well. Adeline (not her real name) shared with AsiaOne on Nov 10 that she had fallen for an investment scam in October, one which caused her to lose more than $320,000 in just a month.
Mother of 2 loses $320k life savings in scam: 'Everything fell apart'
She didn't just lose her money in this encounter - she lost her faith in humanity as well. Adeline (not her real name) shared with AsiaOne on Nov 10 that she had fallen for an investment scam in October, one which caused her to lose more than $320,000 in just a month.
She was first approached by an individual through Instagram, who presented himself as a high-flying businessman. The scammer chatted with Adeline about their hobbies and work life, before asking her to switch to WhatsApp to continue their conversation. After two weeks of interaction, the two became 'friends' and the 'businessman' allegedly offered Adeline an opportunity - to invest in trading gold commodities through a "seed" investment platform, purportedly based under a larger, reputable investment company. Seed investment refers to financing startups in order to aid their development.
He then showed her detailed information to convince her, and although Adeline wasn't keen on taking the plunge, she eventually acquiesced. Her first foray into this 'investment' platform was funded by this scammer who gave her US$2,000 (S$2,721) to experiment with. After turning a quick profit through the platform, the scammer then invited Adeline to invest a larger sum of US$10,000. However, the amount was too daunting for Adeline, who admitted to AsiaOne that she had no interest in the subject and didn't know much about investments.
Sha Zhu Pan: The Pig Butchering Scam 杀猪盘
Victims are scammed on average $24k, and millions in total have been lost. It's a huge cottage industry that Chinese police has had a hard time stamping out. There are scores of recent news stories, blogs, video clips, and other media online about Sha Zhu Pan victims and scammers. Sadly, almost all are in Chinese. I think the rest of the world has to wise up to this, because now as most Chinese are becoming aware of this Pig-Butchering Scam, the scammers are turning their skills more towards non-Chinese, more so this year.
This first half is somewhat detailed because since everyone is generally aware of romance scams, being vague won't convince someone who is in the thick of it and thinks that his/her online friend is THE exception. Exposing specific details of the Pig-Butchering scam is most convincing to current victims that the "spontaneous" events are actually planned.
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