Like many online scams, cryptocurrency fraud comes in different forms.
A very popular type of crypto scam is known as “pig
butchering.” In this type of scam, fraudsters carefully work
to build close, trusted relationships with victims in order to
“fatten up” victims’ crypto portfolios. Once the
victims have deposited substantial amounts of funds into their
accounts, the scammers will then drain the accounts and disappear
with the victims’ assets. What can you do if you believe you
are the victim in one of these scams?
What Does A Typical “Pig Butchering” Scam Look
Like?
“Pig butchering” scams are especially insidious
because their foundation is the development of trusted
relationships with the victims. These relationships take many
forms, including romantic. Typically, scammers initially contact
victims through social media, dating apps, or text messaging
platforms. Sometimes, they make initial contact through feigned
“wrong number” messages.
These scammers create elaborate fake identities to build trust
over time. They may claim to have investing expertise or
connections. After developing rapport with their victim, the
scammer will pitch an investing opportunity involving a purchase of
cryptocurrency on a virtual platform. These platforms may appear
legitimate but are actually controlled by the scammers, allowing
them full control over victims’ funds.
These platforms often use legitimate applications from
third-party websites to further manipulate victims. Scammers will
also request remote access or screenshots of victims’ devices
to further steal information and gain control. Additionally,
scammers often request that victims purchase cryptocurrency through
wire transfers to international accounts, prepaid cards (like gift
cards), and cryptocurrency kiosks.
After the victim buys cryptocurrency, the scammer has them
“invest” those funds through scammer-controlled
platforms. They may pressure victims to invest by exploiting their
relationships, inventing deadlines to create time pressures, and
promising high returns with fabricated evidence of success. Often,
scammers will provide victims with fabricated profits or returns,
giving the false impression that the victims’
“investments” are performing extremely well, motivating
victims to make further deposits.
“Pig butchering” scams are long-term frauds. Scammers
will continue to ask for more “investment” over time.
When payments slow down, the scammers employ more aggressive
tactics. If the victim attempts to withdraw funds, the scammer may
request, as a condition of withdrawal, early withdrawal fees or
payments for “taxes.” Finally, when the victim refuses to
invest more, the scammer will suddenly disappear with all their
funds.
What Are The First Steps I Should Take If I Believe I Am The
Victim Of A “Pig Butchering” Scam?
Stop communicating with the scammer immediately. Do not send any
messages that would tip off the scammer to your knowledge. Before
anything else, switch to new, complex passwords on any account the
scammer may be able to access. Then, block and report accounts the
scammer used to communicate. Write down details of the incident
too, e.g., when and where you were contacted, where you sent funds
and how much you sent, and who you talked to. Collect screenshots
of conversations if they are available.
Can I Recover My Lost Funds?
If you suspect you are in the early stages of a “pig
butchering” scam, you may still be able to withdraw your
funds. If you can, withdraw all your money immediately, change any
login credentials and passwords to accounts the scammers may have
access to, and block their contacts.
Once the scammer has disappeared with a victim’s funds, it
is almost impossible to recover those funds because the transfers
occur through anonymous blockchain transactions. Since these
transfers are often irreversible, it is essential to mitigate
further loss by changing credentials, blocking scammers, and
monitoring bank accounts, credit cards, and credit reports for
fraudulent transactions.
Can I Report The Scam To Law Enforcement Or A Crypto
Exchange?
Yes, you can report the scam to the federal government and local
law enforcement. The FBI has an Internet Crime Complaint Center for reporting
cyber-crimes, including cryptocurrency scams. Any information or
evidence you collect is helpful for substantiating your report in
this complaint. Depending on your jurisdiction, local law
enforcement might also be equipped and willing to investigate these
types of crimes. Reporting the fraud to the cryptocurrency exchange
or financial institution used to facilitate the transactions
between you and the scammer is an important step as well. Even
where these institutions cannot help with recovery of funds,
reporting the scam may help them prevent similar fraud in the
future.
Unfortunately, it is unlikely that these reports will lead to
recovery, primarily because of the challenges in identifying and
locating the scammers. However, when fraud is reported early and
with substantial evidence, the likelihood of recovery improves, if
only marginally.
Can I Privately Sue The Scammers?
It is possible, but very difficult to sue this type of
cryptocurrency scammer. You must determine the true identities and
locations of the scammers to sue them, but this is very challenging
given their very likely fake online personas. If they can be
identified, scammers are frequently located overseas, and suing a
foreign individual is an expensive and time-consuming endeavor, if
it is possible at all.
The most promising legal action to recover funds lost in
cryptocurrency scams is to start or join a class action suit
against scammers or financial institutions and cryptocurrency
exchanges that facilitated the fraudulent transactions. For
additional resources and information on legal action and recovery,
see our other posts, Avoiding and Redressing Cryptocurrency Scams
and Can You Sue a Cryptocurrency Exchange?
What Precautions Should I Take To Avoid Similar Scams?
The most important precaution to take to avoid similar scams is
to understand what these scams look like, and to
never give out financial information or transfer
funds to someone you meet online.
Unfortunately, there are also scams in which a person or company
claims to help people recover cryptocurrency lost to fraud.
Exercise extreme caution when paying money or providing any
personal information to a so-called “recovery
service.”
Conclusion
Given the complexity of these issues, it is important for a
cryptocurrency user or investor to consult with an attorney
concerning best practices in the cryptocurrency space.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
