Crypto Scam Costs Investors Millions

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An old crypto system has a new name – and it’s costing investors millions.

So-called “pig butchering” occurs when a scammer builds trust with his victims before forcing them to deposit more and more of their crypto assets into fake digital wallets or government-controlled websites. crook.

The name refers to how scammers “feed their victims promises of romance and wealth before cutting them off and taking all their money”, according to a FBI report.

And you may have already come across the latest iteration of this pattern.

“Pig Butcher scammers usually send a message via Whatsapp, SMS or another app like Tinder as if it were meant for someone else, often with an attractive person’s profile picture,” says Chen Arad, COO of Solidus Labs, a company that provides tools to help crypto exchanges and institutions prevent market manipulation.

Instead of asking for a large sum of money upfront, scammers work slowly to convince their targets to move their cryptocurrency away from legitimate exchanges and onto fraudulent websites controlled by the scammer that look like trading platforms. genuine trading, according to a Coinbase August Alert.

The scheme is particularly effective because it involves a scammer building their target’s trust over time, Coinbase reports.

After establishing this trust, fraudsters pressure their targets to pour more and more of their money into the fake investment platforms, according to Global Anti-Scam Organizationa Singapore-based non-profit organization that studies cybercrime.

Scammers also find ways to appeal to their target’s emotions, for example by asking questions such as, “Don’t you want to have enough money for your kids?” Jan Santiago, deputy director of Global Anti-Scam Org, told CNBC Make It.

Some scammers even give their targets a small amount of money they claim to be “returns” in order to convince them to invest even larger sums, Coinbase finds.

However, when a victim attempts to withdraw their funds, they are told that they must pay a fee before their money can be released. Often the scammers simply disappear with the stolen funds, which are almost impossible to recover.

“Crypto and blockchain allow for very advanced ways to trace stolen funds through risk monitoring companies like ours, but once funds are lost there is no guarantee they will be recovered,” Arad says.

How to protect yourself from “pig butchery”

Unfortunately, the “pig butcher” is becoming more and more popular. In 2021, $429 million was lost to these types of scams, according to the FBI Internet Crime Complaint Center.

But there are ways to protect yourself.

“For starters, don’t take investment advice from people you meet on Tinder,” says Joshua Crumbaugh, CEO of Phishfirewall and former ethical hacker. “If the fund/currency/etc. came to you via any form of social media or unsolicited communication, be very skeptical,” he adds.

You should also be wary of above-average returns, “especially if they’re able to show you quick returns and you find yourself wanting to invest more money immediately after the initial investment,” Crumbaugh warns. .

“When engaging with crypto, especially for people new to the industry, it is critical to remember that with high opportunity always comes equal risk,” says Arad. “Never expect high returns without risk – that just doesn’t exist anywhere.”

If you’ve fallen for this type of scam, don’t be ashamed. “These people are really expert manipulators,” Santiago says. “If you’ve never heard of this type of scam, it’s easy to fall prey.”

If you have been affected by this type of scam, Global Anti-Scam Organization and Solidus Laboratories provide resources. You can also file a complaint with the FBI Internet Crime Complaint Center.

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