Over the last few years a new type of financial scam (largely around cryptocurrency) has emerged that takes advantage of social engineering techniques. It’s known as “pig-butchering.”
The name comes from the fact that scammers work hard to build trust with the victim and then take everything that person has, i.e. they fatten the pig before butchering it, going for the “whole hog.”
In 2021, the FBI received more 4,300 submissions relating to pig butchering schemes totalling more than $429m in losses. So there is a lot of money to be made by criminals, many of which use forced labour to deploy these scams at scale.
What does a pig butchering scam look like?
The scam usually starts with a text message, for example someone pretending to message a wrong number. If they get a response, they try to strike up a conversation. After gaining the victim’s trust, the scammer might introduce a new cryptocurrency they’ve made a lot of money on, or a connection working in the finance sector that can give lucrative investment advice. They normally back this up with screenshots of broker accounts or give access to a fake trading platform for the victim to try themselves.
Like with traditional Ponzi schemes, the victim achieves success initially which encourages them to go all in with their savings. At that point, the scammer will close the account, take all the money, and disappear.
Warning signs to look out for
Identifying a pig butchering scam can be hard but here are a few warning signs to look out for:
- Mistaken text or WhatsApp messages. If you establish you don’t know the person, then don’t engage.
- Love-bombing. If you do engage with an unknown texter, or you meet someone on a dating site, and they intensify the conversation very quickly, be wary.
- Guaranteed returns on crypto investments. If a person offers you this sort of “opportunity’” walk away. There is no such thing as a guaranteed return on any type of investment.
- Invitations to “special” trading platforms. Don’t automatically believe that a person is telling the truth. Do your research and only trade on known and trusted platforms.