On September 8, 2023, the Financial Crimes Enforcement Network (FinCEN) issued a new alert to financial institutions to bring attention to a prominent virtual currency investment scam called “pig butchering.” Like the practice of fattening a hog before slaughter, the goal of the scam is to gain the victim’s trust by “fattening up” the victim to believe they are in a trusted relationship and then “butchering” or “slaughtering” the victim by stealing all their assets.
What exactly is a pig-butchering scam?
Pig-butchering scams originated in Southeast Asia and have escalated in the U.S. These scams are manipulation techniques that exploit the victim's vulnerabilities through frequent interactions and social engineering. The pig-butchering scam is methodical, targeted, and patient; it usually begins through text messages, direct messages on social media, or other communication platforms. Scammers build up a victim’s trust and gain access to their online account information, sometimes “fattening the pig” by requesting more investments before “slaughtering the pig” and stealing the funds.
The perpetrators who are communicating with victims are themselves victims of human trafficking operations run by criminal organizations based in Southeast Asia and are acting against their will. They are trafficked to scam centers, taught manipulation tactics, and forced to carry out cybercrimes under a constant threat to produce.
How it works
A scammer typically creates a fake social media profile, showcasing wealth and an enviable lifestyle. They make initial contact with a potential victim, usually under the guise of accidentally reaching the wrong number or trying to re-establish a connection with an old friend. When a victim responds, the scammer will communicate with them over time to establish trust and build a relationship.
After gaining trust, the scammer will introduce the victim to a supposedly lucrative investment opportunity, often in cryptocurrency. They will direct them to investment websites or applications designed to appear legitimate, but are fraudulent and ultimately controlled by the scammer.
Over time, the scammer continues to manipulate victims to keep them investing. Scammers will simulate trades to make it look like the victim is earning profits and encourage victims to withdraw some of their “gains” to build their confidence. Convinced that everything is legitimate, the victims invest larger and larger sums of money. The process continues until life savings are emptied. Some victims have liquidated tax-advantaged accounts or taken out home equity lines of credit or second mortgages as part of falling victim to these scams.
Once the victim is unable or unwilling to pay more into the scam, the scammer will abruptly cease communication, taking the victim’s entire investment with them.
It is important to note that although the alert focuses on cryptocurrency, there are instances of this scam involving electronic fund transfers and wire transfers.
Please refer to FinCEN’s News Release and Alert for more information. The alert explains the scam’s methodology and provides red flag indicators to identify and report related suspicious activity.
Jennifer Broskie, CAMS
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