Wikipedia

Pig butchering scam

A pig butchering scam, a.k.a. "sha zhu pan"[2] or shazhupan,[3] (Chinese: 杀猪盘), translated as killing pig game,[1] is a type of long-term scam and investment fraud in which the victim is gradually lured into making increasing contributions, usually in the form of cryptocurrency, to a fraudulent cryptocurrency scheme.[4] They are commonplace on social apps. In October 2023, 12% of Americans using dating apps experienced exposure to this type of fraud, up from 5% in 2018.[5] The scammer builds trust with the victim through online communication, subsequently persuading them to invest in a fraudulent cryptocurrency scheme. The "butchering" or "slaughtering" of the victim transpires when their assets or funds are stolen.[6]

Pig butchering scam
Simplified Chinese杀猪盘
Traditional Chinese殺豬盤
Literal meaningKilling pig game[1]
Transcriptions
Standard Mandarin
Hanyu PinyinShā zhū pán

The scam originated in China in 2016 or earlier,[7] and proliferated in Southeast Asia amid the COVID-19 pandemic. Perpetrators are typically victims of a fraud factory,[8] where they are lured to travel internationally under false pretenses, trafficked to another location, and forced to commit the fraud by organised crime gangs.[9]

History

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A scam centre in Shwe Kokko, Myanmar, where perpetrators of pig-butchering scams are held against their will.

Pig-butchering scams originated in 2016 or earlier as a regional scam in China, originally finding their victims on same-sex dating sites before expanding to opposite-sex dating sites as well. The term "pig butchering" arises from an analogy comparing the initial phase of gaining the victims' trust to the fattening of pigs before slaughtering them.[7]

The modus operandi later spread throughout Southeast Asia at the height of the COVID-19 pandemic. In Sihanoukville, Cambodia—once a prosperous gambling town—many local gambling gangs transformed casinos into scam operation centers performing pig-butchering scams. This was likely a result of a lack of casino attendance on account of the COVID-19 pandemic and the Cambodian government cracking down on commercial gambling.[9][10] Many operations are also run from areas of Myanmar which are outside central government control because of the ongoing civil war, with one important hub being the town of Myawaddy in Kayin State, near the border with Thailand.[11] According to the UN Human Rights Office, hundreds of thousands of people have been trafficked and are trapped in scam centres in Cambodia and Myanmar, with other operations being run from Laos, the Philippines and Thailand.[12] Many of the groups that run pig-butchering scams are overseas Chinese criminal gangs based in Southeast Asia, who traffic ethnic Chinese and others into fraud factories and force these people to commit the fraud.[11]

Pig-butchering scams gained international momentum through the exploitation of online dating apps and social media platforms.[13] Scammers crafted elaborate fake identities to establish romantic or emotional connections with victims, thus marking a departure from conventional financial scams by integrating psychological manipulation. This early phase of these scams primarily targeted local populations but quickly expanded as digital connectivity grew.[9]

The scams evolved significantly with the integration of sophisticated techniques, including the creation of fake online investment platforms and the use of social engineering. A key aspect of this evolution was the use of cryptocurrency for transactions, which appealed to scammers due to its difficulty to trace and recover. The scams' globalization can be attributed to the increased ubiquity of digital interactions and the rising popularity of cryptocurrencies, which provided a new avenue for such fraudulent activities on a global scale.[14]

Notable cases of pig butchering

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The 2023 failure of Heartland Tri-State Bank in Elkhart, Kansas, United States, was directly tied to a pig-butchering scam; CEO Shan Hanes was discovered to have embezzled $47 million from the bank in an attempt to secure his presumed funds. Hanes was charged in federal court with embezzlement in February 2024 and pleaded guilty in May 2024.[15][16][17][18] He was later sentenced to 24 years in prison.[19]

Implementation

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Pig-butchering scams involve a series of meticulously planned steps to deceive and exploit victims, typically focusing on cryptocurrency investment fraud.[4]

  1. Gaining trust: Scams often begin with casual conversations initiated by the scammer, who may pretend to have received the victim's contact details accidentally or through a mutual acquaintance. These initial interactions are designed to build trust and may involve the use of attractive profile images to lure victims.
  2. Introducing the investment: As trust is established, the scammer introduces the victim to a fraudulent investment scheme, promising significant returns in a short period. The scammers use persuasive tactics and counterfeit investment portfolios to convince victims of the scheme's legitimacy.
  3. Collecting money: After persuading the victim to invest, scammers collect funds, often through digital payment platforms or cryptocurrencies, to complicate tracking and tracing of the transactions.
  4. Disappearance of the scammer: Once a substantial amount has been collected, or when victims attempt to withdraw funds, scammers become unreachable, delete their online presence, or create new identities, leaving the victims with no way to recover their funds.

Furthermore, the scammers develop fake brokerage websites and mobile applications to add legitimacy to their scheme, making it difficult for victims to distinguish them from genuine platforms. The report[which?] underscores the impact of these scams, with millions of dollars lost by victims, and emphasizes the importance of caution and vigilance in online investments.[citation needed]

Countermeasures

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The IRS has issued warnings about the rising prevalence of these scams, particularly targeting U.S. taxpayers. The agency notes that losses often reach hundreds of thousands of dollars, with some victims losing as much as $2 million.[14]

An important aspect of countering pig-butchering scams involves tracing stolen cryptocurrencies. This process is intricate due to the decentralized and pseudo-anonymous nature of cryptocurrencies. Specialists in this field utilize various tools and techniques to track the flow of stolen digital assets through blockchain networks.[citation needed]

The process typically begins with the collection of relevant transaction data, such as transaction IDs and wallet addresses associated with the scam. Advanced blockchain analysis tools are then employed to trace the path of the stolen funds. These tools can identify patterns and link different transactions to specific wallets, which are essential in building a case against the perpetrators.[20]

Consequences

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The scam typically combines elements of romance and investment fraud, and often involve the gradual building of a relationship with the victim, leading to significant financial losses. Victims are lured into investing in fake opportunities, particularly with cryptocurrencies, and end up losing large sums of money. The psychological impact is equally severe, as victims not only face financial ruin but also the loss of what they perceived as a genuine, intimate relationship. These type of scams are particularly insidious because they play on both the financial aspirations and emotional needs of individuals, leaving victims feeling betrayed, embarrassed, and reluctant to discuss their experience with others or report it to authorities.[21][22]

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The 2023 Chinese movie No More Bets is a crime drama based on interviews with real victims of the scams. It garnered attention and success in China, bringing the scams and the issues related to them to the forefront of public discourse. The movie highlights the plight of the numerous low-level scammers who are themselves victims of coercion, having been lured from their homes by promises of stable employment, only to find themselves trapped and forced into committing these scams.[9]

See also

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References

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  • Wang, Fangzhou (2024). "Victim-offender overlap: the identity transformations experienced by trafficked Chinese workers escaping from pig-butchering scam syndicate". Trends in Organized Crime. doi:10.1007/s12117-024-09525-5 – via Springer Link.

Notes

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  1. ^ a b "What is a 'pig-butchering' Scam?". Tennessee Department of Commerce and Insurance. Archived from the original on 2024-07-26. Retrieved 2024-07-25.
  2. ^ Wang, Fangzhou.
  3. ^ Santiago, Jan; Camba, Alvin (2024-02-15). "Why the US and China Should Work Together to Solve the Global Scam Crisis". The Diplomat. Archived from the original on 2024-07-20. Retrieved 2024-07-20.
  4. ^ a b "Unmasking Pig-Butchering Scams and Protecting Your Financial Future - Noticias de seguridad - Trend Micro ES". www.trendmicro.com. Archived from the original on 2023-11-03. Retrieved 2023-11-03.
  5. ^ "The Pig Butchering Scam: 10 Common Warning Signs". www.aura.com. Archived from the original on 2024-05-27. Retrieved 2023-11-03.
  6. ^ "District of Massachusetts | United States Files Forfeiture Action to Recover Cryptocurrency Traceable to Pig Butchering Romance Scam | United States Department of Justice". www.justice.gov. 2024-03-13. Archived from the original on 2024-04-28. Retrieved 2024-04-28.
  7. ^ a b Liu, Sijie; Liu, Jingyu (27 February 2019). "东南亚"杀猪盘"："爱情"圈养的网络骗局" (in Chinese). The Beijing News. Archived from the original on 24 March 2024. Retrieved 9 July 2024.
  8. ^ "FinCEN Issues Alert on Prevalent Virtual Currency Investment Scam Commonly Known as 'Pig Butchering'". www.fincen.gov. Archived from the original on 2023-11-03. Retrieved 2023-11-03.
  9. ^ a b c d "The involuntary criminals behind pig-butchering scams". MIT Technology Review. Archived from the original on 2024-04-30. Retrieved 2024-01-29.
  10. ^ Podkul, Cezary (13 September 2022). "Human Trafficking's Newest Abuse: Forcing Victims Into Cyberscamming". Archived from the original on 27 May 2024. Retrieved 2 March 2024.
  11. ^ a b Qian, Isabelle; Robles, Pablo (2023-12-17). "7 Months Inside an Online Scam Labor Camp". The New York Times. ISSN 0362-4331. Archived from the original on 2024-04-13. Retrieved 2023-12-17.
  12. ^ "'Hundreds of thousands' trafficked into SE Asia scam centres - UN". Reuters. 29 August 2023. Archived from the original on 11 December 2023. Retrieved 30 June 2024.
  13. ^ Cryptocurrency scams metastasize into new forms Archived 2024-02-26 at the Wayback Machine Sophos News
  14. ^ a b "CI issues red flags, tips to avoid falling victim to pig-butchering schemes during International Fraud Awareness Week | Internal Revenue Service". www.irs.gov. Archived from the original on 2024-10-05. Retrieved 2024-01-29.
  15. ^ "Material Loss Review of Heartland Tri-State Bank" (PDF). Board of Governors of the Federal Reserve System. Retrieved 11 June 2024.
  16. ^ Bailey, Sam (11 August 2023). "'Huge scam' in rural Kansas town fells fourth U.S. bank in 2023". Kansas Reflector. Archived from the original on 11 June 2024. Retrieved 11 June 2024.
  17. ^ Saulsbery, Gabrielle. "Ex-Heartland Tri-State CEO charged with embezzling $47M in crypto". Banking Dive. Archived from the original on 11 June 2024. Retrieved 11 June 2024.
  18. ^ Alatidd, Jason. "After Kansas bank collapsed, former CEO admits to embezzling $47 million for crypto scheme". The Topeka Capital Journal. Archived from the original on 11 June 2024. Retrieved 11 June 2024.
  19. ^ Dan Mangan (Aug 21, 2024). "Cryptocurrency 'pig butchering' scam wrecks Kansas bank, sends ex-CEO to prison for 24 years". CNBC. Archived from the original on August 22, 2024. Retrieved August 22, 2024.
  20. ^ "Pig Butchering Scam - Protect Yourself!". CNC Intelligence. 2022-12-23. Archived from the original on 2024-01-31. Retrieved 2024-01-31.
  21. ^ "Why "Pig Butchering" and Other Scams Are on the Rise | Psychology Today". www.psychologytoday.com. Retrieved 2024-01-31.
  22. ^ "'Pig Butchering' Scams: What They Are and How to Avoid Them | FINRA.org". www.finra.org. 2022-12-13. Archived from the original on 2024-02-06. Retrieved 2024-01-31.

Further reading

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