Many types of fraud afflict the digital asset market and erode public trust in crypto, but some are more prevalent than others. One variety, in particular, is a persistent problem. So-called pig butchering crypto scams continue to lure unsuspecting victims and inflict vast reputational harm on the industry. California officials have taken an aggressive stance on the issue. Will people finally heed the warning?
In pig butchering scams, bad actors establish relationships through social media or dating apps, gain victims’ trust, and introduce fraudulent crypto investment opportunities. The victims are often people with limited financial knowledge and experience. Having established trust, scammers propose investments in crypto assets and offer to train victims in setting up exchange accounts and provide website or wallet addresses for fund transfers.
California Launches a Crypto Scam Tracker
The fraudulent investment platforms appear legitimate. They purport to show artificial gains in order to fool victims. However, victims are then unable to withdraw funds. In many cases, scammers pressure them into transferring more money under various pretexts like service fees or taxes. Then the scammers vanish and the money is gone forever.
Pig butchering crypto scams derive their name from scammers employing deceitful tactics, treating victims as “pigs” in an abattoir, to exploit through manipulative relationships. These scams tend to be longer than others, with criminals inserting themselves into the victims’ lives (otherwise known as “fattening up”).
Vulnerable groups, such as the elderly, are common targets. It may take time. However, despite the effort needed on behalf of the scammer, the trust they establish can lead to significant pay-offs.
Remain watchful and educate yourself on the tactics scammers employ to separate you from your crypto assets: 15 Most Common Crypto Scams To Look Out For
The news is not all bad. Governments are becoming increasingly aware of the risk of these kinds of frauds. And they are stepping into the breach.
Last year, the California Department of Financial Protection and Innovation (DFPI) launched a cryptocurrency scam tracker whose mission is to help residents “spot and avoid crypto scams.”
Pig Butchering Scams Exploit Personal Relationships
Familiarity with the modus operandi of scammers can help protect the public. If you recognize common types of swindles, you can give them a wide berth.
In a recent case, a California resident fell prey to a scam involving an impostor called Manapool. The victim believed Manapool represented a legitimate decentralized crypto trading platform. Hence, the target invested millions of dollars through Manapool. But when attempting to withdraw funds, Manapool demanded more money under various pretexts, wiping out the victim’s retirement savings.
However, not all scams chase after the big bucks. A California victim was approached online by someone claiming to be Benito Revilla, a legitimate financial advisor. The scammer used the website https://benitorevilla.com to impersonate a licensed broker-dealer agent from USAA Investment Services. The victim lost $500 after receiving a promise of easy profits within ten days.
Last year, California Attorney General Bonta warned California citizens not to “fall for a fantasy.” “Cryptocurrency, like all investments, carries significant risks,” he said in a statement. “There’s no guarantee that you’ll see large – or any – returns. You should only invest money you are willing to lose, and you should be on the lookout for red flags and potential scams.”
In April, the US Department of Justice seized $112 million in crypto linked to pig butchering scams. The seizure targeted six accounts, with the largest portion of funds, around $66.4 million, coming from a Los Angeles-based account.
The California cases are a microcosm of a much larger problem. Worryingly, a recent survey revealed that 35% of all Canadian crypto owners had been the victim of a crypto scam.
BeInCrypto has reached out to California’s DFPI for comment for this story.
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