The Federal Bureau of Investigation (FBI) has issued a warning following a rise in ‘pig butchering’ cryptocurrency investment scams. These scams are usually conducted via social media by scammers who are willing to invest time into building relationships with their victims (pigs). After earning their trust, the scammers convince them to invest in cryptocurrencies via fake cryptocurrency platforms.
In contrast to other forms of social engineering such as phishing, trust is built through long-term communications with individuals with the scammers establishing friendships or potential romantic partnerships via social media platforms. The FBI says that in some cases, the scammers have impersonated long-lost friends of individuals they target. The scammers claim to be expert cryptocurrency investors who have had highly successful investments. They provide fake proof of the investments they have made and the high returns they have achieved and suggest their victims should also invest in cryptocurrencies to get similar returns.
The victims are coached on the investment process and are directed to fake cryptocurrency platforms where they create an account and can track their investments. After being tricked into investing, the sites appear to show their profits growing exponentially, although the profits are faked and are not linked to any cryptocurrency exchanges or to market rates. The high returns encourage victims to make further investments; however, problems arise when they attempt to cash out. The scammers use tactics to delay, stating that they must pay fees and taxes to withdraw their funds, resulting in further losses, and none of the invested money can be withdrawn.
The scammers then break off all contact, and often shut down the websites and relaunch them on a different domain to continue their scam. The FBI reports that losses to these scams range from tens of thousands to millions of dollars.
The FBI has warned the public to be wary of any investment advice offered on social media websites and to verify the validity of any company, platform, or investment opportunity offered on social media or from long-lost friends. The websites used for these scams often mimic reputable companies, but have misspellings in the URLs, only deviating slightly from the companies they spoof. Some of these scams involve downloading an app as a tool for investing. The validity of any app must be carefully checked prior to downloading. And of course, if any investment opportunity sounds too good to be true, it most likely is.
Investment fraud is a leading cause of losses to cybercrime. According to the FBI’s Internet Crime Compliant Report, 20,561 complaints about investment fraud were filed with its Internet Crime Compliant Center (IC3) in 2021, with investment fraud the second biggest cause of losses to cybercrime, with almost $1.456 billion lost to the scams in 2021 alone.