Ethereum

‘Pig slaughter’ cryptocurrency romance scams increase 85-fold since 2020

According to a new report from Chainalytic, cryptocurrency activity related to “pig-slaughter” romance scams has increased 85-fold from 2020, with revenues doubling from 2022 to 2023.

The report found that romance scams increased during this period, despite a decline in the total value transferred fraudulently. In particular, the scale of Ponzi schemes has declined, which the report’s authors linked to a 2023 bear market and high-profile investigations that are deterring the public.

Pig slaughter scams involve victims using social engineering to establish online relationships, often romantic, before giving the scammers access to their funds. A few weeks into the relationship, the scammer explains that he is making a lot of money with cryptocurrency and suggests that the victim try using cryptocurrency as well. Scammers take advantage of a victim’s lack of cryptography knowledge to confuse and trick them into handing over access to their funds.

“It often involves tricking victims into performing more technical tasks, such as signing transactions that they don’t understand,” said Adam Hart, principal investigator at Chainalytic. decryption. “Over the next few weeks, they convince the victim to invest progressively more money into the application, with the victim having no idea that the application is essentially a backdoor.”

The latest data from the Chainalogy 2024 Crypto Crime Report shows that romance scams have the worst financial impact on victims. The average payout size for romance scams in 2023 was $4,593, followed by NFT scams at $3,095.

“It is generally much easier for victims to invest a disproportionate amount of money outside of an unknown third-party investment service,” Hart explained. “But also, if (the scam) targets individuals, the fraudster’s revenue should be a little higher.”

According to the report’s authors, people who fall victim to romance scams are more willing to invest more money into the scam because they believe their loved ones are investing their money where they are currently making money.

Hart explained that “violations of trust” make it particularly difficult for victims to endure non-financial impacts. He said, “This is a person who you thought truly cared about you, but he often shows up at a vulnerable moment in your life and ends up ruining you financially. It must be really difficult to deal with psychologically.”

For this reason, Hart said many romance scams may go unreported due to the shame that comes with them. This means that when a romance scam is reported, it will have an on-chain footprint unlike other scams.

“Pig butcher scammers don’t put all the money into one big pot right away. They either have an address that is identifiable to the victim, or hasn’t been reported yet, or is blocked from some kind of wallet interface or exchange,” Hart says. . he explained. Other scams, such as Ponzi schemes, often pool the victim’s money in one wallet before removing it from underneath the wallet.

Who is behind the pig slaughter scam?

Romance scammers are often highly organized groups who are wary of money laundering and hiding their activities. However, when you spend that much money to operate it, it is difficult not to leave traces.

As a result, some romance scammers were caught. An Interpol-led operation in December 2023 arrested 3,500 suspected cyber fraudsters and seized $300 million linked to pig slaughter and other scams.

The report found that people who deceive pig slaughter victims are often victims of human trafficking.

“Their workforce is made up of people who are tricked into coming to countries like Thailand for technical work. They then basically kidnap them and take them across the border to places like Myanmar where they have corrupt relationships with local officials.” Hart explained. They are often forced to work under threat of reprisal, Hart added. This adds, “Often, the victims are scammers who are defrauding them on the other end of the phone.”

This type of operation led Chinese police to enter Myanmar to arrest two “powerful warlords” running a fraud centre, ultimately leading to China’s involvement in the region’s civil war.

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