News Excerpt:
Authorities in the US charged two Chinese nationals, in a $73 million cryptocurrency scam known as pig butchering.
More about News:
- The US accused the two of being involved in a type of cryptocurrency investment scam known as pig butchering, which has become a global billion-dollar industry.
- The defendants are alleged to have instructed co-conspirators to open US bank accounts in the name of shell companies.
- Victims were induced online into depositing money into these accounts funds that were then laundered through US financial institutions to bank accounts in the Bahamas.
What is pig butchering?
- “Pig butchering,” a term that refers to the practice of fattening a hog before slaughter, originated in China and went global during the pandemic.
- "This kind of investment fraud is different from all other types due to a few distinctive characteristics.
- Emotions and greed are the main tools used to trick the buyer, and it's usually highly elaborate.
- An investing concept or even a romantic relationship could initiate it. The victim of these frauds frequently gets tricked into believing that the purported investment is legitimate and profitable, so the amount of money progressively increases.
How was the Pig Butchering Scam carried out?
- It all begins with the “host" contacting people online through social media, dating apps, or deceptive messages.
- Once they’ve found a target, known as the “pig," the host establishes a false sense of friendship and encourages them to explore cryptocurrency trading.
- Using a fraudulent trading app, the host deceives the victim into believing they’re making profits from fabricated trades.
- Gradually, as the victim’s trust grows, the host persuades them to invest more money, a tactic referred to as “fattening the pig" before the scam is revealed.
- When victims attempt to withdraw their funds, the fake platform either makes excuses or imposes substantial fees, ultimately exposing the scam. Retrieving lost funds is exceedingly difficult due to the nature of blockchain transactions.
Role of social media
- Scammers have shifted from traditional methods of investment fraud to using advanced communication technologies like messaging platforms, dating apps, social media to interact with their victims.
- Unlike the overt and often unsolicited phone calls or emails typically associated with conventional scams, this approach allows them to gradually build rapport and trust.
- By leveraging modern channels, they can create intricate stories and exploit vulnerabilities over time, making detection more challenging.
- Scammers may even create fraudulent trading apps or platforms, displaying fictitious investment returns to deceive their victims.
- These false pretenses enhance the appearance of authenticity and make the fraud seem real,
What are the warning signs to avoid falling victim?
- If someone insists on keeping the relationship or investment secret, this is a significant warning sign.
- Additionally, requests for payments in cryptocurrencies or other hard-to-trace methods should raise suspicion.
- Verifying the legitimacy of any investment platform independently and being cautious of unverifiable success stories are crucial steps to avoid being scammed.
- The first red flag would ideally be promises of returns that are significantly higher than market trends, Partner,
- Claims by the scammer of insider tips or family connections in the investment industry are also major warning signs.
- Perpetrators skillfully manipulate emotions and exploit vulnerabilities to siphon money from their victims, often resulting in profound financial consequences for those affected.
Who are the common victims of these scams?
- People experiencing loneliness or isolation
- Individuals with little financial literacy or investment experience
- Those undergoing significant life changes or emotional turmoil
- Middle-aged and older individuals with larger savings or retirement funds
- Naturally trusting or empathetic individuals
- Users on platforms like Telegram and Instagram
- Homemakers and retired individuals seeking quick money
How can victims seek recourse or report the crime?
- In the event of falling victim to a Pig Butchering scam, individuals can seek recourse by lodging a formal complaint with the local police authorities or the economic offences wing,
- Provide relevant documents and evidence to support their case.
- Victims should also report the scam to relevant regulatory authorities, such as the Securities and Exchange Board of India (Sebi) or the Reserve Bank of India (RBI), which have jurisdiction over certain types of investment schemes.
- Authorities can also undertake initiatives to educate the public about such sham schemes, equipping them to handle these situations more effectively.
