A crypto scam nightmare

People around the world are losing millions through a “pig butchering” scam – but it’s got more to do with crypto than it does our porcine pals, writes Elena Siniscalco

What do a dark human trafficking industry in South East Asia, pigs and crypto have to do with you? More than you think. After all, the first rule of successful scams is that anyone could fall for it. And people across the world are.

Those who created it call it Shāzhūpán – “pig butchering”. The victim, like a pig, is lured in, fattened with the promise of fast cash, and then “butchered” when the scammer leaves with all their money.

Flocks of young, tech-savvy people are falling for it.

“Pig-butchering” originated in Asia and is still little known in Europe. Yet it has found ripe conditions here in the UK: amid a cost-of-living crisis, investment scams are on the rise. UK Finance defines the current level of fraud in the UK as “a national security threat”. And according to research from Marcus by Goldman Sachs, Brits aged 18-34 are twice as likely as other age groups to fall victim to financial scams. Blend this all, and you get a dangerous cocktail of online insecurity. A country full of pigs to butcher.

The consequences on people’s finances and wellbeing are dire. “Karen”, a UK-based victim, shared her story with City A.M. but asked to remain anonymous as her family and friends know nothing about it. She says that after being scammed she had suicidal thoughts. She had lost a quarter of a million pounds.

It all starts with a message. It could be on a dating app, on Linkedin, or via email. For Karen, it was on Facebook. It’s from someone who thinks you were at school together, who shares your love for puppies, or who’s interested in your professional life. The scammer is polite, asks you about your day, and sends you pictures of the food they’re eating.

Compound interest

Most of the scammers are based in compounds in South East Asia, but as they increasingly target Westerners, they have developed manuals on how to communicate and build a relationship. They seem to think that sending pictures of food to each other is all we do online. Cyber scams experts say this feature of the scam is recognisable in almost all cases of “pig butchering”.

The conversation goes on for months, and turns into a romantic, friendly or professional one. For Karen, it was a friendship that lasted from January to April of last year. Not once in those four months did her scammer talk about money. Then, one day, he mentioned crypto. He told her about a specific crypto app; one on which, in theory, she could make quick easy gains. He suggested she should download it. Karen was lured in. She took money out of her account and invested it on the app. A week later, all her money was gone. She never got any of it back.

Trapped on both sides

Karen’s scammer was different from the others. After weeks, he contacted her again to tell her the full story. He revealed he was not an affluent British adult like he claimed to be, but a twenty-seven year old trapped in a scam compound in Myanmar. “My scammer told me they have targets, and if they don’t complete them they slap you and leave you without food and drinks”, Karen says. According to the scammer, millions of dollars are made in these compounds. Many of the people there have been trafficked or attracted by the promise of a real job.

The scammer’s account is corroborated by several reports from international organisations like Global Anti-Scam Org (GASO). Founded by a pig butchering victim, GASO now focuses on supporting people like Karen, as well as investigating the scam compounds. They have already rescued 190 human trafficking victims. Grace Yuen, a communications officer at GASO, wishes financial institutions and crypto platforms were doing a bit more to help prevent this. “If they see somebody wiring a big amount of dollars and they’ve never done a wire transfer, I feel more than one question should be asked before that wire goes through”, she says. She adds some cryptocurrency platforms like Coinbase have been doing some good work on flagging fraudulent wallet addresses, but clearly more needs to be done. Given the fraudsters are mostly located outside the UK, the National Crime Agency often doesn’t have the resources to trace them.

“Ultimately, this is all social engineering. That’s what all of these attacks are based on”, says Sherrod DeGrippo, VP of threat research and detection at Proofpoint. The scammers are trained in putting the victim in a “new” emotional state – pressuring them, hitting them in their weak spots – to cause them to do something they wouldn’t normally do. They often target people who’ve had a recent life change or bereavement.

“In 12 months we’ve got £14.473m back. Out of that, £11.5m was from crypto investment pig butchering scams”, says Paul Hampson, managing director at CEL Solicitors, a Liverpool-based firm. Partners at Madison Legal also said there was a rise in young men being lured into “pig butchering” scams from users pretending to be young women in bikinis or on private jets.

Of the international victims surveyed by GASO, more than 75 per cent lost more than half their net worth, and a full third were driven into debt. Like Karen, many feel too ashamed to speak to their friends or family, let alone the authorities. Scam is fuelling a world-wide industry of crime and violence.  New platforms and lies are already in the making, as scammers play a cat and mouse game with the authorities. “Trust but verify”, advises Yuen. And never be so complacent to think it won’t be you.