The “Pig Butchering” Crypto Scam: Unraveling the Massive Wealth Transfer to Southeast Asia

Cybersecurity California Prosecutor Erin West on the Massive Wealth Transfer to Southeast Asia from a Crypto Scam called ‘Pig Butchering’

The Scope of the Pig Butchering Problem

Pig butchering has emerged as a widespread online scam that costs victims billions of dollars annually. California prosecutor Erin West has dedicated herself to fighting back against these scams and the individuals behind them. In a recent interview with CyberScoop’s Safe Mode podcast, she discussed the origins of pig butchering, how scammers deceive their victims, and what tech companies can do to help prevent these schemes from proliferating.

According to West, pig butchering represents a new form of scam that targets individuals from all walks of life. Scammers, operating out of remote locations in Southeast Asia, employ sophisticated techniques to entice and manipulate their victims. They target millennials, software engineers, divorcees, and elderly individuals, utilizing a playbook of psychological tactics to cultivate relationships. This scam operates on a massive scale, resulting in unprecedented financial losses in the billions of dollars, transferred primarily from the middle class in the United States and several other countries. Anyone with money can fall victim to this scam.

Understanding the Name “Pig Butchering”

The term “pig butchering” originates from the scammers themselves. In Chinese, it is called “sha zu pan,” which translates to “butchered pig plate.” The name is apt because it accurately depicts the process through which scammers exploit their victims. They “fatten up” the victims by courting them over an extended period, building a long con. Eventually, they “butcher” the victims, taking every last penny they possess. The scammers meticulously gather information about the victims during the courtship phase, including their possessions, relationships, and financial assets, in order to maximize their wealth extraction. While some find the term “pig butchering” harsh, it effectively communicates the devastating nature of the scam.

The Mechanics and Vulnerabilities of the Scam

The pig butchering scam begins with scammers deliberately targeting vulnerable individuals online through platforms such as LinkedIn, dating apps, Instagram, and even random text messages. Lonely individuals are particularly susceptible to these scams, seeing an opportunity for friendship or romance when someone reaches out to them. The scammers use various tactics to engage and manipulate their victims, establishing trust and emotional connections over time.

After a while, the scammers introduce the concept of cryptocurrency investments, framing it as a lucrative opportunity. They present themselves as successful cryptocurrency investors and offer to teach the victims. The victims are then encouraged to invest money by depositing US dollars into cryptocurrency exchange platforms like Coinbase.com or Crypto.com. The scammers guide them through the process, facilitating the conversion of dollars into cryptocurrency and directing them to transfer the funds into the scammer’s wallet. Victims are shown fabricated account statements, falsely indicating significant returns on their investments.

One of the unique aspects of this scam is the combination of the emotional manipulation derived from the perceived romantic relationship with the excitement of imagined financial gain. Victims become convinced that they are becoming wealthy and willingly invest more money, often depleting their life savings, liquidating assets, and even borrowing from friends and family.

The Magnitude of the Problem

The FBI reported that $3.3 billion in losses occurred in online fraudulent investment schemes last year alone. However, due to underreporting caused by shame and embarrassment, the actual number is believed to be significantly higher. West conservatively estimates that the true figure could be three times that reported, suggesting losses totaling around $10 billion. These tremendous financial losses have devastating consequences for victims, causing some to contemplate suicide and others to face the collapse of their marriages and entire financial security.

Assisting the Victims

As a prosecutor, West encounters victims of pig butchering scams on a daily basis. She acknowledges the heartbreaking nature of these encounters, speaking with grown men in tears and individuals who feel lost and desperate. West’s approach involves a combination of emotional support, listening, and practical advice. Victims often need someone to listen to their distress, but they also require guidance on reporting the scam and taking the necessary steps to mitigate the damage.

The Role of Task Forces and Law Enforcement

West is part of a task force in Santa Clara County that focuses on combating cybercrime, including cryptocurrency-related scams. This task force collaborates with local and federal agencies, using their collective expertise to tackle these emerging threats effectively. Santa Clara County’s early exposure to cryptocurrency cases, such as SIM swapping, enabled them to gain a head start in navigating the complexities associated with these crimes.

Platform Responsibilities

West emphasizes the need for collaboration between law enforcement and technology platforms to combat pig butchering scams. While there have been improvements in the efforts made by platforms like Match, Meta (Facebook, Instagram, WhatsApp), LinkedIn, and telecommunication companies to address these issues, West believes there is still much more to be done.

In an effort to disrupt the scammers’ operations, West proposes targeting the primary avenues through which victims and scammers connect. By implementing proactive measures to prevent scammers from accessing victims through dating apps, social media platforms, and random text messages, West believes significant progress can be made in combating the scam.

Promoting Individual Responsibility

In addition to platform actions, West emphasizes personal responsibility in protecting oneself from scams. Individuals should exercise caution, especially when approached by strangers online, whether on dating apps or professional networking platforms like LinkedIn. It is crucial to thoroughly vet individuals before accepting their friendship or connection requests. Blocking unknown or suspicious individuals and refraining from engaging with text messages from unfamiliar sources can also help reduce exposure to scams.

Overall, the fight against pig butchering scams requires a multifaceted approach involving collaboration between law enforcement, technology platforms, and individuals themselves. Through education, disruption, and personal vigilance, there is hope for slowing down the rapid growth of this devastating scam.