“Pig butchering” is not what you think. I’m not referring to life on a farm. This is the terminology used to refer to one of the most popular scams currently plaguing the market. It’s costing victims millions of dollars a year. This is a cryptocurrency investment scam sweeping the nation.
As vulgar as the name is, it makes sense once you understand how it works. Scammers try to “fatten victims up” and then take them for everything they have. Typically, these are cryptocurrency schemes, but they could involve any type of financial trading. The typical script is that a scammer will cold-contact people via texting or social media messaging, pretending that they’re attempting to contact someone else. Once the recipient responds by saying they have the wrong number, the scammer attempts to strike up a conversation and try to build a rapport with the victim. After establishing one, sometimes over long periods, the scammer will suggest that they’ve been making a lot of money in cryptocurrency investing and tell the victim they can do the same. It’s an opportunity too good to pass up, they allege.
Next, the scammer will suggest a trustworthy app or website to do the trading. These platforms will appear trustworthy and may even impersonate the platforms of legitimate financial institutions or trading platforms. These apps may even have a ton of downloads and positive reviews in the application store, which were all really farmed out to create a false impression. Once the victim downloads the app, they will be directed to make their investment. You may think this ends once the victim has sent the money, but you’d be wrong. The victims can watch “real-time market data” meant to show their investment potential. They’ll see their investment growing over time, which the scammers hope will encourage additional investments. Over the course of months, many think they’ve reached new levels of wealth and slowly invest more and more until they’ve invested everything they have. Once the victim is unable or unwilling to invest any more into the scam, the scammer will cease communication with them, shut down the account, and disappear. Absconding, of course, with all of the victim’s investment.
The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) issued an alert last year to bring attention to this scam. In addition to providing general tips and resources and SAR filing instructions, it includes a list of red flag indicators banks may find helpful in detecting, preventing, and reporting potential pig butchering activity. The following are some of the notable red flags:
- Customers with no history of using cryptocurrency suddenly exchanging a high volume of fiat currency for cryptocurrency.
- Customers expressing a sudden interest in an investment opportunity promising significant returns from a stranger who reached out to them unsolicited.
- Customers who say they were instructed to exchange fiat currency for cryptocurrency and deposit it at an address supplied by the instructor.
- Inactive or low-activity accounts that begin to show sudden and frequent withdrawals of large amounts being exchanged for cryptocurrency.
In addition to filing a SAR, financial institutions are encouraged to refer pig butchering victims to the FBI’s IC3 and can also refer customers to the Securities and Exchange Commission’s tips, complaints, and referrals system to report fraud.
Financial institutions may refer their customers to DOJ’s National Elder Fraud Hotline at 833-FRAUD-11 or 833-372-8311 for elder victims of pig butchering.