#Crypto 360
#Security & Data Privacy
They say love is often deceptive. Online fraudsters have taken it a step further and are literally scamming users through romance scams.
Key Takeaways
• In a romance scam, a fraudster forms a virtual romantic relationship with you and then makes you send them money or invest in a Ponzi fund through emotional manipulation.
• In 2016, a new kind of romance scam, a pig butchering scam, originated in China which proliferated across the globe around 2019 during the COVID-19 pandemic.
• If money enters a virtual relationship too soon, rest assured that it’s a romance scam.
It’s the Valentine’s Week, and you are lonely. But suddenly, your phone beeps; you receive a DM from a stranger. Intrigued and alone, you come across a beautiful stranger who’s interested in dating you. But... there is the tyranny of distance.
You still begin a conversation—deep and heartfelt. You don’t even realise but soon, your chats long for hours. You ask to meet in person, but your love interest is loaded with work, even on weekends, or their parents are visiting. Suddenly, your paramour entices you into investing in a hot and trending crypto scheme.
You go ahead and send away money. Suddenly, your funds are gone, and your lover has blocked you. Oops, your Valentine’s date turned out to be a romance scam and you became a victim of a pig butchering scheme.
Yes. Come Valentine’s Day and there is a wave of online romance scams, with fraudsters eager to feast on pig butchering. So, how can you save yourself from such frauds and becoming a source of mirth? On this Valentine’s Day, we explain in detail.
Image: How romance scams work, by Norton Security
To begin with, what is a scam? A scam is a fraudulent way to dupe a naïve individual into sending their money or any other valuable assets to a scammer.
Often, a scammer impersonates someone occupying a position of authority or trust, such as a bank representative or a government officer. The scammer then tricks an unsuspecting individual into revealing private financial details. The fraudster then uses these details to steal the funds stored in a bank or a scheme. The advent of technology has led to a surge of romance scams that take place over dating sites or social media platforms.
In a romance scam, a fraudster forms an online romantic relationship with you (often, it’s so desperately quick that you can sense a scam from far away). Once the fraudster has made you fall head over heels for them, they begin to distance themselves from you.
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So far, you haven’t even met this person or seen their face. You are stressed and ask them, why this sudden distance? The fraudster claims that they lost their job, or their parents have fallen sick. They are short of funds and depressed. You offer to help with money. Some reticence on their part but you insist. But as soon as they are flushed with your money, they block you. This is how a romance scam takes place.
In 2016, a new kind of romance scam originated in China and proliferated across the globe around 2019 during the COVID-19 pandemic. In this scam, a charming fraudster makes a naive person fall in love and makes them invest in a fake investment scheme, often involving cryptocurrency. It is called a pig butchering scam, also known as a “sha zhu pan” scam.
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Several of the victims received a similar message: A hot, single person is near your area. It is obvious that the scammers took advantage of the loneliness and alienation felt by thousands of single people during the pandemic. The pig butchering scam didn’t remain confined to China and spread to different parts of the world.
John Griffin, a finance professor at the University of Texas at Austin, with the assistance of a graduate student Kevin Mei, published a study about pig butchering scams titled “How Do Crypto Flows Finance Slavery? The Economics of Pig Butchering” in March 2024. The study found that from January 2020 to February 2024, the scammer exploited more than $75 billion in cryptocurrency from thousands of victims over decentralised finance (DeFi) wallets and blockchain-based payment solutions through pig butchering.
The tragedy has an ironical layer as the scammer defrauding naive and lonely users are often themselves victims of human trafficking. Hailing from southeast Asia, these victims are enticed with the promises of lucrative jobs in countries such as Cambodia and Myanmar. Once under the control of the trafficking mafia, these kidnapped people are forced to work as scammer in labour camps located within large compounds. They are tortured the moment they refuse to cooperate. Often, they are even refused food.
In fact, these trafficking gangs even receive cryptocurrency in ransom from the families of the kidnapped victims in exchange for their freedom. As per the United Nations, more than 200,000 people are being held in scam compounds.
A pig butchering scam takes place over a few weeks or months as it takes time to build a fake romantic relationship and gain enough trust. The scammer impersonates a fake online identity with a beautiful face, a high-profile career, and a dynamic personality. Often, the images of people, friends, office, home etc. on the social media or dating platforms are sourced from accounts of real individuals.
The scammer contacts you over social media or dating platforms, proposing a possible romantic interest in you within the few first messages themselves. The conversation between the two of you begin to last hours each day. You talk about your childhoods, careers, disappointments, past heartbreaks, and much more.
With time, the scammer builds a strong, emotional bond with you. They sing your praises all the time, complementing your looks, personality, and character. Both of you share your interests with each other. The other person is too excited about a trending investment scheme such as a cryptocurrency. Even you can’t help getting interested.
Then, the scammer offers you an opportunity to invest in this superhot cryptocurrency scheme that has generated huge profits for your love interest. The scammer even shares with you profit documents and tax receipts. Of course, they are fake. But you don’t bother to check because you’re in love.
The scammer shows you dreams of financial independence, a shared future, and a life of comfort. They use the trust and bond built over time to emotionally manipulate you into making the investment. Manipulated and eager to make a fast buck, you send away your hard-earned money. Your paramour suddenly disappears from your life, blocking you on all the social media platforms and phone numbers.
In 2023, a rural Kansas bank, the Heartland Tri-State Bank, collapsed due to its CEO Shan Hanes embezzling tens of millions of dollars to invest in a crypto scheme. Federal Reserve investigators said that Hanes fell for a pig butchering scam, and he embezzled funds from multiple accounts worth $47.1 million and transferred them to a crypto wallet.
Hanes kept lying the whole time about the nature of these fund transfers and shareholders of the bank lost between $9.3 million and $13.4 million. In May 2024, Hanes pleaded guilty to one count of embezzlement, with his sentencing scheduled for 8 August. He can face a maximum of 30 years in prison, a maximum fine of $1 million and up to $60.5 million in restitution.
A man working in the San Francisco Bay Area lost $1.2 million to a pig butchering scam in 2021, reported Forbes. CY, the pseudonym the man chose to converse with the news publication, received a message from a woman named “Jesscia” on WhatsApp in October 2021.
The woman claimed to be an old colleague. Though CY didn’t remember her, he nonetheless began to talk to her over the messaging application. CY was struggling to support his family financially, his father was unwell, his wife was overworked, and his daughter was about to enter college.
CY shared these concerns with Jessica and a bond developed between the two. She suggested that he should invest in crypto as she herself was making a lot of money due to her uncle providing her insider trading information. First, CY tried a trading simulator to try the scheme; no real money was involved for now.
As he smelled success on the simulator, he began to invest real money in a crypto scheme as suggested by Jessica. Meanwhile, CY’s father died in November 2021. He turned to Jessica for emotional support. Within minutes, he was talking about the investment again.
CY even withdrew $200,000 from a home equity line of credit and borrowed money from friends to invest in the crypto scheme. CY lost $1.2 million to the pig butchering scam. It included his savings of the last 30 years, including his daughter's education fund. Jessica, of course, just vanished into the thin year. CY admitted himself to the hospital.
An Indian-origin woman working in the software industry in Philadelphia fell prey to a pig butchering scam and lost over $450,000, reported the Economic Times. The victim Shreya Dutta met a man with the name of “Ancel” on a popular dating application who claimed to be a French wine trader. Shreya was battling a touch emotional period due to her recent divorce and the scamster was quick to emotionally manipulate her because of her vulnerabilities.
He told her he wanted to share his future life with her and suggested that a profitable crypto investment plan could fund their shared future. The fraudster used deepfake videos and other advanced technologies to gain Shreya’s trust and made her invest in the crypto scam. She lost over $450,000 in the process, leaving her with a significant debt.
For once, take an honest look at your past love life, and ask yourself why someone is suddenly falling head over heels for you. Alright, let’s assume you are a lucky fellow. But someone you have never even met in person is asking you to send or invest money. Shouldn’t this set off alarm bells? Look for these red flags to avoid falling prey to a romance scam:
• Too quickly falling in love with you? Avoid.
• Always making up excuses to avoid meeting you? Avoid.
• Too much emotional manipulation? Avoid.
• Did money enter the chats too quickly? Certainly avoid.
Image: List of red flags that will help avoiding a romance scam
If you, unfortunately, end up losing money to a pig butchering scam, you should take the following steps:
Taking a few precautions as mentioned above can certainly help you avoid a romance or a pig butchering scam and a lifelong heartbreak. Love is in the air but be sure to sniff off any scam!
A romance scam involves a scamster developing a virtual romantic relationship with a naive and lonely person and making them send money to the fraudster or invest in a Ponzi fund through emotional manipulation.
A pig butchering scam is a type of romance scam in which a scamster makes a naive person fall in love and makes them invest in a fake investment scheme, often involving cryptocurrency. This scam originated in China in 2016 and proliferated across the globe around 2019 during the COVID-19 pandemic. A pig butchering scam is also known as a “sha zhu pan” scam.
A study conducted by a University of Texas at Austin professor found that pig butchering cost the victims more than $75 billion in crypto from January 2020 to February 2024.
If you fall prey to a pig butchering scam, immediately report it to the law enforcement agencies in your jurisdiction and inform your bank or trading exchange about the same.
If you are entering an online conversation, look for red flags such as a quick admission of romantic feelings from the other side or constant excuses to avoid face-to-face meetings. If money enters a virtual relationship too soon, rest assured that it’s a romance or a pig-butchering scam.
This article is for informational purposes only and not intended as investment or financial advice. It contains opinions and speculations that are subject to change without notice.
The author and publisher disclaim any liability for decisions made based on the content of this article. Readers are advised to conduct their own research and consult a financial advisor before making investment decisions.
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