Key Takeaways:
- Scams are deceptive schemes aimed at tricking individuals into surrendering money, personal data, and/or valuable assets through manipulation and dishonesty.
- Pig butchering scams often blend romance or friendship and investment fraud, luring victims with promises of financial freedom through cryptocurrency trading.
- Scammers build trust over time, leading victims to invest in fake platforms, only to disappear after extracting significant funds.
- To protect against such scams, exercise caution with unsolicited messages, and be sceptical of unsolicited investment advice.
What Is a Scam?
A scam is a fraudulent or deceptive scheme designed to trick individuals into giving away their money, personal information, and/or other valuable assets. Scammers use various tactics and strategies to manipulate their victims into believing they are dealing with a legitimate opportunity, service, or product, when, in reality, their intentions are dishonest and malicious.
Scams take many forms, such as fake investment opportunities, phishing emails, pyramid schemes, identity theft, lottery scams, remittance scams, and more. They often exploit psychological triggers like urgency, fear, greed, or a desire for gain in order to manipulate victims into taking actions that benefit the scammer.
What Are Pig Butchering Scams?
The pig butchering scam, appearing more recently in the crypto space, is a cross between investment and romance scams. In pig butchering scams, a con artist approaches a victim via dating apps, social media, or online communities and begins a romantic relationship or friendship with them.
Once the victim’s trust is ‘earned’ by the scammer, rather than asking for money for themselves, the scammer encourages the victim to trade cryptocurrencies as a means towards financial freedom. The victim — generally with little to no experience in crypto — often then seeks the scammer’s ‘help’ to find a trustworthy platform.
The trap closes as the scammer then directs the victim a platform that appears unrelated to the scammer in order to trick their victim into investing their money; they may even tell a victim that has already invested money into their scam that they have made fantastic gains on their initial investment in order to deceive them into deploying additional capital.
Scammers may even return some of victims’ early investments in the form of ‘profit’, building trust and encouraging victims to invest even more. Once the victim parts with as much money as the scammer believes they can extract, they — and in some cases, the fake platform too — disappear.
One unique characteristic of this scam is that it usually happens over an extended period of time, allowing trust to be formed.
Learn about the closely related romance scams as part of our University series on crypto scams.
How Pig Butchering Scams Work in Detail
- The scam typically begins with a text message or online contact, where the scammer pretends to have the wrong number but gradually builds a connection with the victim.
- The scammer gains the victim’s trust, meanwhile also mentioning their wealth and encouraging their intended victim to invest in cryptocurrency through a specific trading platform.
- To build trust, the scammer starts with requests for a small sum of money and may show the victim fake profits, making it seem like they are already earning returns — sometimes even sending the victim a portion of the alleged profits.
- As the victim becomes more invested, the scammer convinces them to trade larger amounts. However, when the victim tries to withdraw their money, they are often told they need to pay fees or taxes.
- Once the victim tries to withdraw their money, signaling to the scammer that they are losing trust, the ‘pig’ is ready to be butchered: the scammers disappear, leaving the victim financially devastated and unable to recover their funds.
How to Avoid Falling for a Pig Butchering Scam
In order to avoid falling for this type of scam, bear in mind the below considerations:
- Be cautious of unsolicited messages or contacts from strangers, especially on social media or dating apps.
- Avoid oversharing personal information on social media platforms.
- Indicate a disinterest in cryptocurrency or unwillingness to part with funds; if they disappear, it likely is proof that their intentions were not genuine.
- Refrain from investing based solely on advice from someone recently met or who makes contact out of the blue.
- Do not let FOMO influence buying assets, especially when returns are ‘guaranteed’ or unrealistically high.
- Avoid trading on unknown and/or unregulated platforms that are not reputable.
- The golden rule: If it seems too good to be true, it probably is.
- If suspecting a scam, report it to the appropriate authorities, such as the FBI or local law enforcement.
By following these precautions alongside others, traders can reduce the risk of falling victim to pig butchering scams and protect themselves from financial loss.
Also read our 101 of the security and data privacy best practices to protect against scammers.
Conclusion
As crypto evolves, scammers continue to do so, as well. Remain diligent and vigilant, and use only secure, reputable platforms like Crypto.com that employ strong security features, including multi-factor authentication (MFA) and Anti-Phishing Codes. Avoid investing in unknown platforms, trust intuition, and remember the ‘too good to be true’ rule. Always DYOR.
Due Diligence and Do Your Own Research
All examples listed in this article are for informational purposes only. You should not construe any such information or other material as legal, tax, investment, financial, cybersecurity, or other advice. Nothing contained herein shall constitute a solicitation, recommendation, endorsement, or offer by Crypto.com to invest, buy, or sell any coins, tokens, or other crypto assets. Returns on the buying and selling of crypto assets may be subject to tax, including capital gains tax, in your jurisdiction.
Past performance is not a guarantee or predictor of future performance. The value of crypto assets can increase or decrease, and you could lose all or a substantial amount of your purchase price. When assessing a crypto asset, it’s essential for you to do your research and due diligence to make the best possible judgement, as any purchases shall be your sole responsibility.
