What is Pig-Butchering Scams?
A pig-butchering scam, also referred to as a ‘Sha Zhu Pan’ in Chinese, is a sneaky and long-term investment fraud that mostly begins on social media or dating applications with a romantic angle. In October last year, 12% of the US-founded dating app users fell victim to the scam.
The scams initially emerged in China in 2019. Since that time, Southeast Asia has become a major hub, and organized groups in nations such as Laos and Myanmar run these schemes like businesses.
The name originates from scammers’ view of victims, typically as ‘pigs.’ They are initially convinced to invest small amounts, and after believing in the earning potential, the pigs are motivated to invest more.
Afterward, the pigs are butchered after the scammer believes they have acquired all they can from them. ‘Pig pens’ are the social media platforms utilized to deceive victims, while ‘pig feed’ are the lies swindlers use to ensure the constant flow of money.
How Pig-butchering Scams Function Explained
Pig-butchering scams operate as detailed in the below steps:
1st step: Initial contact between a scammer and the target.
2nd step: Trust is established first with the scammer initiating a chat with the target about things such as their hobbies, interests, and career goals, creating a sense of security.
3rd step: The scammer informs the target about an excellent investment opportunity in crypto and promises to help them make money. A link to an investment platform that appears to be legitimate is sent to the target.
4th step: The target decides to spend money, starting small. The platform reveals quick investment growth, reassuring the target and motivating them to invest more.
5th step: The target invests a considerable amount of money. However, one day, they cannot withdraw funds, and the scammer cuts off communication.
This ultimate stage is called ‘pig killing’ and involves the scammer vanishing with all the funds they have encouraged their victims to invest.
Illustration of Crypto Pig-Butchering Scams
The below cases are some of the scams reported to the authorities:
- The San Francisco Bay Area investor where A Bay Area man, CY (pseudonym), lost $1.2M in a crypto pig-butchering scam.
- Shan Hanes, Heartland Tri-State Bank’s ex-chief, is allegedly accused of stealing $47M from the bank to invest in crypto. The heist reportedly involved butchering tactics.
What are The Effects of Pig-Butchering Scams
Victims can end up in major financial loss since they will find it difficult to repay loans. The scams also make people more suspicious of legitimate investments.
Indicators of Pig-Butchering Scams
Red flags to watch out for include:
- Quick expression of strong feelings, particularly without meeting in person.
- Being borrowed money by a stranger.
- Promises of easy money and risk-free investment.
- Failure to disclose private information or professional credentials
- Pressure to continue investing more money after the initial investment.
- The recommended investment platform is unknown or lacks basic security features.
- Encountering fees and delays when trying to withdraw funds.
- The scammer uses threats, guilt, or emotional appeals when the target hesitates or becomes suspicious.
What to Do After Suspecting You Are a Victim?
The steps involved entail:
- Revoking permissions
- Transferring funds
- Contacting support
- Avoiding recovery services
- Documenting transactions
- Seeking support
- Reporting the fraud
What are the Groups Behding the Pig-butchering Scams
The following groups are reportedly involved in the pig-butchering scams:
- Allnodes
- Trust Group
- Unknown Group
- Ada Group
How to Prevent Butchering?
The following crucial tips should be followed:
- Confirm identities: Verify people’s identity, particularly on dating apps or social media.
- Question high returns: People must watch out for offers that guarantee significant returns with little or no risks.
- Research platforms: People should confirm if platforms or apps are regulated and legitimate.
- Safeguarding private data: People should keep their financial and personal information to themselves. Such information should only be shared with known and trusted people.
- Following intuition: In case something does not feel right, a person should not hesitate to say no or take their time to consider.
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