FBI notified over 4,300 victims of ‘pig butchering’ crypto scams in past year
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After victims are tricked into buying crypto, they are shown fake online accounts with fictitious returns while the stolen funds are moved offshore, an FBI official said.
The FBI said Thursday that it notified over 4,300 victims of cryptocurrency investment fraud — known as pig butchering — since launching an initiative last year to identify and alert people targeted in the fraud schemes.
The victims spanned all 50 U.S. states, and around 76% of them were not aware they were being scammed, the FBI said, adding that over $285 million were saved in the notification efforts.
The accessibility of cryptocurrency investments has created fertile ground for the spread of pig butchering, an investment scam where fraudsters cultivate a relationship with individuals online and manipulate them into investing in fake crypto schemes before disappearing with all the money.
The name “pig butchering” comes from the analogy of fattening a pig before slaughter, where scammers “fatten” their victims with false promises. Blockchain analysis company Chainalysis said Thursday that scammers received at least $9.9 billion in stolen crypto last year, notably through sham, high-yield investment opportunities.
The FBI operation launched last year, dubbed Level Up, involves trained bureau and Secret Service agents emailing or calling victims to let them know they’ve been hoovered into an investment scheme.
Using victim reports and the blockchain’s public ledger, investigators work with cryptocurrency exchanges, social media companies and other private sector partners to trace stolen funds, identify perpetrators, and locate additional victims of the fraud schemes, James Barnacle, an FBI deputy assistant director, told reporters.
Chinese criminal organizations are frequently involved in these acts and often target Asian Americans because of language similarities, he added.
Victims of these scams believe they’re investing in cryptocurrency, and while they may initially purchase crypto, the funds are immediately stolen and moved offshore. Victims are then shown fake account statements, often through apps or websites mimicking legitimate financial brokerages, displaying fictitious investment returns to create the illusion of profit. But in reality, no actual investment has been made.
“They’re scammers. There is no cryptocurrency in these schemes. There is only the pitch by bad guys that cryptocurrency is a great investment opportunity,” Barnacle said.