Pig-butchering is a method used by scammers who drain money out of a investor’s cryptocurrency account. The scam uses an official-looking cryptocurrency investment website to bait investors with advertisements of quick and large returns. Investors sometimes invest their life savings in hopes of receiving huge returns on investments.
Cryptocurrency is the umbrella term for online currencies like Bitcoin, Ethereum, and Dogecoin. Bitcoin was the first cryptocurrency, launched shortly after the 2008 economic rescission in January 2009. Other cryptocurrencies followed, making cryptocurrency trade, purchase, and sale a multi-billion-dollar industry.
The currencies were initially intended for Dark Web purchases and were an alternative to traditional banking systems. Similar to the stock market, these currencies have different values according to current market trends impacted by global economic shifts—for example, the instability caused by the COVID-19 pandemic or wars between nations.
An industry with large financial gains and relatively affordable investments leads to scams, scam artists, and growing investor interest. The idea behind “pig butchering” stems from Southeast Asia and began before cryptocurrency, with scammers posting fake job ads to lure in individuals with a promise of opportunity. The twist with cryptocurrency is that fake online advertisements promise huge returns quickly. Scammers scour the internet, looking for optimistic crypto-investors to become the victims.
“I invested more than half a million, about $560,000 total,” a crypto-investor who wishes to remain anonymous said. “That was everything I had.” After investors often place thousands of dollars worth of cryptocurrency on the website, the scammers show financial gains through rising graphs and dollar amounts. The catch is that investors withdraw little to no funds seen in their online accounts hosted by a fake investment platform.
“Curiosity pulls people into the scam,” Frank Stallone, Sylvester Stallone’s brother, once said. Cryptocurrency offered people a chance to get rich quick, which sounds like a scam in itself, but for some early investors, that is what happened. Moises Reyes got involved with cryptocurrency four years ago when his colleagues recommended a company with quick returns as an investment opportunity. He had luck with popular sites like CoinBase, so he was hooked when he heard about an exchange website called PFXLT.com, offering huge gains.
Reyes and countless cryptocurrency investors began investing amounts in the thousands. Online, the investment appeared to work; his $10,000 investment grew to $25,000 within a week. Reyes saw this and invested an additional $24,000. After a week, the investment grew to over $129,000. The problem? The website did not allow him to withdraw the funds.
“[The platform] allowed me to withdraw some money. When I got confidence, I linked my trust wallet to the account, which had $30,000.” Reyes said, “5 to 10 minutes later, they emptied out my wallet; the money was gone.”
Reyes and others who feel they can increase their cryptocurrency’s value often try alternative websites like PFXLT.com and other sites promising quick returns, boosting real-world profits if the site is legit and allows investors to withdraw their investments. “I thought it was legit because when I typed it in on Google, the website was the first to pop up on the search engine. It looked real with no indication of being fake or a scam,” Reyes said.
“You are not alone; hundreds and thousands fall for these scams,” said Eun Young Choi, Director of the National Cryptocurrency Enforcement Team (NCET). “If an investment is too good to be true, it probably is.”
The FBI made progress when they identified North Korea as having stolen more than $40 million from investors and were able to return most of the stolen money. The odds of having investment funds returned after a crypto scam improve if the incident is reported immediately, according to the FBI.
Reyes reported the scheme to the FBI right after he noticed the money was no longer in his account. The FBI has worked closely over the past few months on this scheme as hundreds of Americans report similar issues retrieving their money from these unsuspicious cryptocurrency exchange sites.
The Securities and Exchange Commission (SEC) regulates, to some extent, cryptocurrency exchanges. But when it comes to “pig-butchering” and similar scams, the money is usually unrecoverable, according to the FBI.
Moreover, federal governmental agencies like the SEC, Internal Revenue Service (IRS), Federal Trade Commission (FTC), and Office of Comptroller of Currencies (OCC) have made little formal rulemaking regarding the sale, trade, regulation, and recovery of these types of digital currencies, according to Global Legal Insights (GLI).
The most recent regulation thus far from the SEC charged Coinbase, Inc., the main cryptocurrency trading platform, on June 6, 2023, with operating as an unregistered national securities exchange, broker, and clearing agency and failing to register as a “service program.”
A risk is taken with any investment. Research the site, invest lightly with money that causes little concern if lost, and establish a deposit and withdrawal history. An individual should use trusted sites like CoinBase or similar and not venture into platforms that do not have a longstanding reputation. The prolonged increase in governmental interest in cryptocurrency investments will lead to more safeguards and secure trading platforms in the near future.
By Alex Fernandez