By Evan Spicer
Director of Cryptocurrency Investigations
Cybercriminals are going whole hog on new ways to grab funds from the public. Their newest tactic sounds like it should take place at a 4-H fair. The Federal Bureau of Investigations is warning the public against pig butchering scams.
The criminals behind these scams promise their victims that they will make a killing, but it’s the fraudsters who bring home the bacon. What differentiates pig butchering scams from many other types of online fraud is the scammers will cultivate a relationship with their victim, similar to raising an animal as livestock. They encourage them to “feed” their client accounts and without warning – the clients get financially slaughtered.
Sam Bankman-Fried and FTX: a Pig Butchering Scam out of the Madoff Playbook
The most famous – and perhaps one of the most destructive – examples of a pig butchering scam pre-dated the term. Bernie Madoff ran a hedge fund for decades. Only in the financial collapse of 2008 did it come to light that Madoff had made off with client funds in a Ponzi scheme.
In other words, Madoff wasn’t really acting as a broker but was funding client withdrawals with client deposits. He was funneling money through his own system and a lot of it stayed in his wallet.
What made the Madoff scandal so extreme wasn’t just the millions of dollars clients lost but that they felt they trusted Madoff. Many of his clients looked to him as a colleague or even a role model of financial success. Others regarded him as a friend.
In the wake of the FTX collapse, many are making comparisons between Sam Bankman-Fried and Bernie Madoff. Sam Banmkan-Fried funneled money between his companies without any organization or even scruples. He lavished his top investors with fancy trips and properties in the Bahamas. He basically bribed them to look the other way.
Pig Butchering Scams Go Beyond “Stranger Danger”
Warnings about crypto scams in the past have taken a similar form to urging kids to “beware of strangers” without letting them know that, sometimes, it’s the people who seem to be friends that can cause the most damage.
People are likely to be less cautious with pig butchering scams because they don’t feel as if they are dealing with strangers. The fraudster has gained their confidence to the extent that they will let their guard down and do things they wouldn’t ordinarily do – like send large quantities of money or take trading risks.
Types of Pig Butchering Scams
The following frauds can fall under the category of pig butchering scams:
Fake Broker Crypto Scams
Sam Bankman-Fried is a prime example of fake broker crypto scam. He promises investors that they will make money on trading crypto when no legitimate trading is taking place. In fact, he’s funneling funds between companies and accounts until he runs out of money. Then the game is either up or he disappears. Or he tries to disappear and the game is up because In this case, the fraudster got caught.
Unlike Sam Bankman-Fried, many fake broker crypto scams remain anonymous and go on robbing clients. That’s why it’s important to take action and inform MyChargeBack experts immediately if you suspect you’ve lost money to a crypto scam.
Phony Customer Support Messages
These can be tricky because scammers have gotten quite skilled at making fake messages seem genuine. They will borrow the same wording and graphic design as real customer service messages. To avoid getting confused, always check the address to make sure it matches with real correspondence.
The scammers will tell the victim that they need to verify their account or their credit card number. They threaten a penalty if action isn’t taken immediately. This will encourage the victim to panic and give over sensitive information without thinking.
It’s important to remember you’ll never be asked for sensitive information by a payment platform or a merchant except if you are on the actual site. Always check addresses and never click on these links. Check your account on the site and if there is a problem, there should be a notification there.
Romance Bitcoin Scams
People look for love online but they often end up with more than they bargained for. Romance scams gained a higher profile with the Netflix series The Tinder Swindler last year. However, it isn’t just on Tinder, but anywhere online that romance scammers strike.
We all know we shouldn’t hand over money to people we meet online. However, when sentiment is involved, people can feel swept away and brush aside these rules. Drop any romantic interest who brings money into the relationship. That’s always a bad sign.
Social Media Imposter Crypto Scams
These crypto scams may not involve people we know personally, but they are fake celebrity endorsements. Many failed celebrity endorsements of FTX were genuine – these actors and athletes made the mistake trusting FTX and making ads for a phony crypto exchange.
However, much more common are fake endorsements the actual celebrities never made at all. Scammers will use photos, fake accounts, and deepfake photos and videos to convince people a celebrity is endorsing a crypto campaign that turns out to be a bitcoin scam.
Always confirm with a Google search if the offer is real and even if it is, learn from celebrities who regret backing FTX. Avoid taking investing advice from actors and athletes who didn’t actually make their fortune investing in the first place.
Have You Lost Money to a Pig Butchering Scam? Talk to MyChargeBack Professionals Today
If you have lost money to financial fraud, talk to the MyChargeBack team. Our investigations will provide evidence to bolster your claim. Our investigation reports are essential for tracking down your funds and getting you started on the road to fund recovery.