What is Pig Butchering? Crypto romance scams on the rise

What is a Pig Butchering scam?

The Pig Butchering scam, also known as ‘Sha Zhu Pan’, refers to a type of online investment fraud. It is based on scammers creating fake profiles and personas to lure victims into fraudulent schemes. 

The term’ Pig Butchering’ refers to the criminals’ practice of luring their victims into fake investments- simply put, they approach victims and work on building trust over time before leaving with all the money they can steal. Scammers fatten up their victims before slaughtering them – that's how the Pig Butchering scam got its catchy name. 

Even though Pig Butchering scams happen concerning all kinds of investments, they become a global problem in the aspect of crypto investment scams, with reported losses all over the world.

The origin of Pig Butchering scams

Pig Butchering scams emerged in the last few years as a regional scam in China when scammers started finding their victims on dating apps. That is why they are referred to as romance scams. From its beginning, Pig Butchering was based on building trust and intimate relationships with victims. 

Romance scammers spread throughout Southeast Asia during the Covid-19 pandemic. These scams became more organised- for example, in Cambodia, many local gangs transformed casinos into scam operation centres performing Pig Butchering scams on a larger scale. 

Pig Butchering scams emerged as a way to target the local population and individuals on online dating apps or social media platforms. However, they soon gained international momentum and became part of a much bigger problem.

Pig Butchering operations as a deep-rooted problem

Pig Butchering scams are linked to the problem of human trafficking and they come at a broad humanitarian cost.

It has been reported that more than 200,000 people in Southeast Asia have been forced to conduct online scams, often being enslaved by criminal organisations. Gangs in Southeast Asia run a corporate.like structure, using human trafficking victims to run the Pig Butchering scams.

While these operations have been largely spotted in Cambodia, Laos and Myanmar, as being rooted in Chinese organised crime groups, they started spreading to the rest of the world as well. 

Financial losses suffered by victims are huge; back in 2023, the FBI reported approximately $4 billion in financial losses from such scams. Even though authorities in Asia focused on cracking down these schemes, the Pig Butchering activity spread worldwide.  

For example, it was reported that Dubai became one of the largest places of Pig Butchering operations and that it even became popular in Eastern Europe when the law enforcement in Georgia managed to discover fraudulent call centres that worked on luring victims into cryptocurrency investments.

To learn the basics of common scams within the crypto space, why not read this article: 'The most common crypto scams & how to avoid them'.

Regulatory responses to Pig Butchering

The alarming rise of Pig Butchering scams and the significant financial losses of victims prompted authorities to raise awareness and work out certain regulatory responses.

Global organisations and regulatory authorities have been working on ways to combat Pig Butchering scammers. For example, the FBI tried to raise awareness by publishing warnings and guidelines to help potential victims avoid scams.  

In the European Union, the Markets in Crypto Assets (MiCA) Regulation includes norms to protect consumers by holding crypto providers accountable for financial losses. Other countries outside the EU, such as the UK and the U.S., have enhanced regulatory measures and enforcement actions to safeguard consumers and ensure that crypto providers are compliant with AML standards. 

To find out more about the EU's crypto regulation, we suggest reading this article: 'What is Markets in Crypto Assets (MiCA)? Europe's Crypto Law'.

All of these efforts are part of a global initiative to increase security within the crypto marketplace and the online world as a whole. 

How do Pig Butchering scams work?

Pig Butchering scams are sophisticated and typically follow carefully arranged tactics for stealing victims' money.

Pig Butchering is also known as a romance scam; at least it started that way. Scammers try to create an online identity and pose as successful and attractive individuals on social media or dating apps. The psychological aspect of such schemes means that perpetrators carefully create an online image that would appeal to the potential victims’ vulnerabilities. 

These fake personas are usually carefully crafted, using AI-generated photos and backstories. 

The second step is about making contact; scammers get in touch with victims through dating apps, social media, and sometimes even by making phone calls or sending text messages. Scammers usually contact more people at once, hoping someone will fall prey to their strategies. 

The third step is the crucial one- scammers go a long way to establish trust and build a relationship with their victims. They tend to engage in frequent communication, show interest in the victim’s personal life, and often share their fabricated story to create a sense of intimacy. Scammers like to use basic psychological tricks such as mirroring techniques to get the victim to trust them. 

Once the trust has been established, Pig Butchering scammers are now in a good position to introduce fake investment opportunities to the victim. These opportunities commonly include cryptocurrency investments. Perpetrators get the victim to, for example, visit a fraudulent platform or download an investment app.  

However, their work here is not done yet. Scammers tend to help the victim through the process of creating the account and depositing the initial amount, which is usually low, all for the purpose of lowering the victim’s guard even more. The trust is fortified if the victim believes that the investment is a legitimate one. 

Scammers want victims to give away as much money as possible. They tend to show the victim fake reports regarding their return on the investment to encourage them to invest even more funds. As mentioned above, these scams are closely tied to psychological tricks so scammers like to be using time-sensitive investment offers or talk about big investment opportunities one shouldn’t miss. 

Finally, when the victim gives away money, the perpetrator cuts all communication and goes away. Apps or websites are taken off online, and the victim is left with financial losses and no data about the scammer’s real identity. 

Perpetrators will try to get access to the victim's money and bank accounts- even if someone is a fallen victim already, it is advisable to keep track of all credit reports, accounts, and credit card statements to spot any unfamiliar transactions.

If something like this happens, victims should contact the authorities as well as their bank or financial institution to report the incident and discuss further options for recovering stolen funds.

It is not only about losing funds- scammers also get victims’ sensitive data such as personally identifiable information and can use it to conduct an identity theft and contact people close to the victim. 

Main Pig Butchering tactics

Although there are some variations, below is a list of the most commonly used tactics.

Is the Pig Butchering scam a social engineering strategy?

Whether you call it Pig Butchering, catfishing, or just social engineering, these scams have been around for many years. They are all based on the same principle- scammer's tactics include gaining the victim's trust, stealing as much money as they can, and vanishing afterward.

Since the scam mixes up elements of romance scams and investment fraud, it typically includes creating a relationship with the victim. The falling victim invests money in fraudulent investments and ends up with significant losses.

Therefore, it is considered that Pig Butchering is a form of social engineering as the psychological impact is severe. Such scams play both on the emotional needs and financial desires of individuals which makes it easier for Pig Butchering scammers to deceive victims and take away their money as well as other personal or financial information.

'Wrong number' messages

Aside from contacting a potential victim on dating sites, through social media, or sending messages via WhatsApp or other applications, they tend to approach the victim accidentally, making it seem like the text was intended for someone else.  

An accidental message serves as bait- after you tell the scammer that the message is not for you, they tend to continue the conversation and make it more personal. 

It is recommended to always be wary of engaging with strangers and carefully consider any unsolicited messages or group chat invitations to avoid falling prey to a Pig Butchering scheme.

The group chat tactic

Potential victims usually get added to a group chat on, for example, WhatsApp, where the topic is financial. Most of the people in the group chat will be part of the investment scam, but the number of people involved makes the chat look more legitimate. 

Pig Butchering perpetrators like the group chat tactic because they don’t have to cold contact the victim, and a potential victim usually lowers their guard when determining that many other people are involved and doesn't suspect a broad online scam is going on behind the curtains.

Love bombing online scams

A Pig Butchering scam is filled with red flags- if it seems too good to be true, it probably isn't true. Looking for warning signs can sometimes be hard because scammers use human psychology to create a relationship with a victim to invest money in a fraudulent scheme.

Since this scheme started as a typical romance scam, it is important to mention online love bombing.

As shown in the Netflix true crime documentary under the name ‘The Tinder Swindler’ about Simon Leviev, who managed to convince several women that he is the son of a diamond oligarch, many people fall prey to scams. 

Romance scamming helps perpetrators to gain the trust of their victims and take over their funds. A romance scam typically involves a new relationship that moves quickly, and the victim is being showered with gifts, plans, and fake promises.

Luring into investment scams

People get across new acquaintances online who claim they have insider knowledge regarding cryptocurrency investment opportunities or offer help in trading. It is usually based on redirecting the victim to a certain app or platform where they can buy crypto assets.  

Sometimes these acquaintances ask for assistance in securing a mining certificate or talk to victims about liquidity mining. 

All of these apps and platforms are fake, but they make it look like the victim is going to get a big return on their investment.  

That is why financial and crypto education is of utmost importance as it makes you more vigilant to potential scams and able to recognise fake exchanges and applications. If you know a lot about cryptocurrency investing, it is less likely that you will fall prey to online scammers.

Additionally, raising awareness about cryptocurrency scams and used tactics can help protect more users from becoming victims of such frauds.

To learn about crypto basics and trading, check out available courses on our Learn Crypto Academy. 

How common is Pig Butchering in crypto space?

In April 2024, prosecutors in Brooklyn, New York, seized approximately two dozen web domains associated with a Pig Butchering scam, in which perpetrators engaged in online conversations with unwitting victims to lure them into crypto investment scams.

The Pig Butchering victims in the Brooklyn investigation included a 51-year-old woman who lost $23,000 after she was added to an online group chat about crypto investments. The victim downloaded an app from Coinformat, made eight deposits, and was tricked into thinking that her investment had grown to around $400,000.

When she tried to withdraw funds, chat administrators told her that she must pay taxes and blocked her from the group.

The Pig Butchering scam is not associated with cryptocurrency investments solely. Scammers try to steal both crypto assets and fiat money. However, since the crypto market is still maturing, scammers are taking advantage of the people's lack of knowledge and belief they could become rich overnight.

Besides believing in huge returns on investment, replying to a stranger’s online message could be the first step in losing a lot of money, even your life savings.  

Spotting fake applications

The Pig Butchering scam is all about building trust between the perpetrator and the victim and making the victim believe that the investment is legitimate. So, it targets people with fake crypto trading apps. 

For example, in May 2024, Group IB's Threat Intelligence and Fraud Protection analysts discovered a fraud campaign targeting Android and Apple iOS users. Apps found on Apple’s App Store and Google Play, as well as phishing sites, were part of a Pig Butchering scam targeting crypto investors in the Asia-Pacific region, the Middle East, and throughout Europe. 

It has been reported that these apps didn’t encompass any typical malicious traits as perpetrators have created an illusion of a legitimate trading platform to lure victims. Additionally, these apps managed to bypass checks by laying down fake activities with mathematical formulas and graphics.

Can you get your money back?

In the media, there have been reports of people getting their stolen money back. For example, a certain lady received a $140,000 check in the mail from Massachusetts officials after falling for a crypto scam. Her funds were among the hundreds of thousands of dollars worth of crypto assets the authorities managed to seize from the scammers. 

The Attorney General’s Office in Massachusetts investigated a company called SpireBit that lured victims by using ads on social media promising big returns on investments.  

At first, the authorities didn’t have any luck- the company’s executives were fake personas and a supposed London headquarters turned out to be a kitchenware business. When victims tried to withdraw funds, the company sent them forged bank papers.  

However, investigators who posed as SpireBit customers were able to pinpoint cryptocurrency wallets used by the fake company- state officials then managed to win a court order that froze the company’s assets on Binance. 

While there are positive events when authorities manage to find the stolen funds, the chances of getting your money back from a Pig Butchering scam are slim to none.  

These scams are becoming even more sophisticated and widespread. Their impact on victims is devastating, leaving people in financial ruin. Instead of relying on the probability of getting your funds recovered after you fall prey to a scam, it is more important to stay vigilant and informed about all the tactics and strategies employed by online scammers. 

If you have been a victim of Pig Butchering scammers, file a report with your local law enforcement. Submit detailed records of all interactions associated with the scam as any additional information can help the investigation.