Feb 14, 2023 - Technology

"Pig-butchering" romance scams are getting harder to fight

Illustration of sweet hearts candy with a skull and crossbones, "Byte Me", "$weet Pea", "Gold Digger", "Be Mine" and "Love You" written on them.

Illustration: Shoshana Gordon/Axios

A long-running, romance-based crypto scam is getting more sophisticated and harder to stop, researchers and officials warn.

The big picture: Government officials have cautioned for years about a scam tactic known as "pig butchering" that's resulted in victims losing as much as half a million dollars at a time.

How it works: The scam typically begins with someone either starting a conversation with potential victims on a dating app or sending a text to a random phone number.

  • In the latter tactic, scammers will send a message that says something like, "Hey, Jane, hope you're doing well," to engage their victim. After, they'll continue the conversation and claim that it's "fate" that they met.
  • Once trust is established, the scammer will suggest the victim move the conversation to WhatsApp or Telegram, where the scammer will start to encourage the victim to invest in a fake crypto app.

By the numbers: The Federal Trade Commission estimated in a report last week that nearly 70,000 people reported a romance scam in 2022 and the reported losses hit $1.3 billion last year.

  • 34% of those losses were tied to cryptocurrency-related romance scams. Another 27% involved victims sending money through bank wire transfers or other payment methods.
  • The median reported monetary loss was $4,400 per victim.

Details: In a report Monday, Sean Gallagher, senior threat researcher at Sophos, uncovered a Hong Kong-based pig-butchering operation that highlights just how much thought criminals put into their scams.

  • In this operation, the scammers approached Gallagher via a direct message on Twitter and even continued to engage with him after he disclosed his day job.
  • Scammers requested he download a legitimate trading app, MetaTrader 4, from a fake Japanese bank website. When Gallagher asked why he couldn't download the app from the App Store or the Google Play Store, the scammers had a good excuse: The app is sanctioned in the U.S. since it was created by a Russian software company.
  • As Gallagher started exploring the app, the scammer offered to introduce him to her "uncle," who she claimed was a former Goldman Sachs analyst, to help set up investments.
  • Scammers also got ahead of most victims' thinking and optimized the Google search results for their fake bank website so it was listed higher than the actual, legitimate website.

Between the lines: Victims typically are highly educated people who have recently gone through a life-changing event, such as a divorce or an isolating health issue, Gallagher told Axios.

  • Some victims Gallagher has spoken to are also "successful businesspeople" or IT professionals. Ages vary, but most are in their mid-30s to early 50s.
  • "Most of these people were emotionally vulnerable because of their isolation or something else in their life situation," Gallagher said.

The intrigue: Pig-butchering scams originated in China, and most of them continue to have a connection to the region — making it much more difficult for law enforcement to crack down on the schemes.

  • "China has been going after these operations in China, but they do not feel obliged to go after operations that are targeting people in third countries," Gallagher said.

Yes, but: Law enforcement is still trying to stop the scam in its tracks by targeting its infrastructure. In November, federal prosecutors seized seven domain names connected to ongoing pig-butchering scams.

Be smart: Be wary of online communications with strangers who promote a cryptocurrency investment or encourage moving the conversation to a WhatsApp or Telegram channel.

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