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What is a Pig Butchering Scam?
Pig butchering is a social engineering scam where attackers lure victims into investing in fraudulent and illegitimate investment schemes.
In pig butchering scams, the scammer fakes an online persona and looks to build trust with the victim. Once the scammer has cultivated a relationship with the victim, they proceed to steal their money.
Key Takeaways
- The pig butchering scam gets its name from the Chinese phrase “Shā zhū pán” which refers to the practice of fattening pigs before slaughter.
- Pig butchering scammers are known to create carefully crafted fake online personas.
- The best way to avoid becoming a victim of pig butchering scams is to ignore unknown messages and calls you receive on social platforms.
- In September 2024, the US SEC charged five entities and three individuals in a pig butchering scam case.
- Studies by faculty and student members of the University of Texas estimated pig butchering scams to have stolen over $75 billion.
- Show Full Guide
How Pig Butchering Scam Works
Pig butchering scams are known to have originated in China. The scam gets its name from the Chinese phrase “Shā zhū pán” which refers to the practice of fattening pigs before slaughter.
Similarly, the scammer of a pig butchering scheme aims to “fatten” their victim over time with trust before being “slaughtered.” This scam is also known as the “romance scam,” as the scammers may look to build a romantic relationship with the victim.
Here is how pig butchering scams work:
Fake online persona
Pig butchering scammers are known to create carefully crafted fake online personas. They may pose as a successful professional with a credible backstory and public information available on social media platforms. Fake profile pictures are easily fabricated using online images and artificial intelligence-generated photos.Contacting the victim
Pig butchering scams are particularly common on social media platforms and online dating websites. Attacks can start via messages, emails, or phone calls. Some scammers may also initiate contact with the pretense of a wrong-number text message.Building trust
Pig butchering scams are long-term schemes. A scammer may spend weeks or months building a close relationship with the victim. During the early days of the attack, scammers tend to be careful not to spark suspicion and avoid talking about money or investments. Instead, scammers show interest in the victim’s life to create a sense of intimacy.Investments
Once the scammer is confident about the relationship they have nurtured with the victim, they will start talking about investment opportunities. Scammers typically present themselves as investment experts, share fake success stories, and promise outsized returns in a short period.Collecting deposits
Next, the scammer will persuade the victim to invest in a fraudulent scheme. The scammer looks to build trust further by making it seem legitimate by allowing withdrawals and delivering investment returns. Cryptocurrencies are often the choice of investment vehicle preferred by scammers for their privacy-protecting properties.Disappearance
Once the victim invests significant amounts of money into the fraudulent investment scheme, the scammer will cut ties with the victim and disappear abruptly.
8 Warning Signs of Pig Butchering Scams
Here are the top warning signs of pig butchering scams.
5 Tips to Protect Yourself From Pig Butchering Scams
Here is what you can do to protect yourself from pig butchering scams:
The best way to avoid becoming a victim of pig butchering scams is to ignore unknown messages and calls you receive on social platforms.
There is plenty of personal information available online. An Internet search on the suspect could help you identify discrepancies in the scammer’s fake online persona.
Never share sensitive personal information such as banking details, social security numbers, and passport details online.
Always verify the legitimacy of the investment platform before signing up. Never forget to conduct your own research before making investments.
Staying informed about ongoing scams and frauds will help you identify pig butchering scams. There are scam alert websites that provide related information and help identify fraudulent websites. The US Securities and Exchange Commission (SEC) advised investors to check the backgrounds of anyone offering investment opportunities at Investor.gov.
Real-Life Examples of Pig Butchering Scams
Scammers persuade victims to invest in fake ICO
In September 2024, the US SEC charged five entities and three individuals in a pig butchering scam case. According to the SEC, the two scammers impersonated financial industry professionals in WhatsApp group chats. Once they established a connection with victims, they persuaded them to create accounts at a fake exchange.
The scammers convinced victims that the fake crypto exchange was a legitimate unit of an SEC-registered broker. The scammers then persuaded victims to invest in fake initial coin offerings (ICO) as a way to make substantial returns.
According to the SEC, the scammers wired more than $2 million from the theft to bank accounts in Hong Kong.
Sophisticated pig butchering scam involving staking
In a separate incident, the SEC alleged that scammers who posed as wealthy professionals contacted investors via LinkedIn and Instagram.
The scammers convinced victims to open accounts on a fake crypto exchange. They then convinced victims to invest in crypto staking, mining and yield farming products to earn as much as three percent return per day.
When investors tried to withdraw their balances from the exchange, they were told that their crypto tokens were frozen due to a legal inquiry. The scammers also resorted to blackmailing victims using their romantic communications over WhatsApp.
Can You Get Your Money Back After Pig Butchering Scams?
Victims of pig butchering scams have little to no chance of recovering their investments.
There is hope for recovery if the victim comes to the realization that they are being defrauded before the disappearance of the scammer. In such a case, the victim must consult with law enforcement officials immediately.
One rare case of recovery of lost funds occurred in the US, when the Santa Clara County District Attorney’s office managed to recover over $354,000 in USDT stablecoin from a crypto pig butchering scammer’s Binance account.
Crypto exchange Binance complied with law enforcement’s request to freeze the accounts. The stolen funds were transferred to an account controlled by local law enforcement officials.
The Impact of Pig Butchering Scams
Studies by faculty and student members of the University of Texas estimated pig butchering scams to have stolen over $75 billion.
According to John Griffin and Kevin Mei, pig butchering scammers used major crypto exchanges as “exit points” to withdraw stolen funds.
Crypto exchanges in the US have faced regulatory action by the hands of the SEC. The most high profile case was that of Binance founder Changpeng Zhao (CZ) who was sentenced to four months in prison for enabling money laundering activities at the world’s largest crypto exchange.
The Bottom Line
Pig butchering scammers give cryptocurrencies a bad name. As an individual, the only way to prevent this scam is by spreading awareness. We hope that Techopedia’s pig butchering scam definition helps in this regard.
Additionally, clearer crypto regulations will help curb the extensive use of cryptocurrencies in pig butchering scammers. Till then, be safe and always do your own research (DYOR) before investing.
