CRYPTOCURRENCY scams are becoming increasingly common, and one of the most sophisticated and dangerous scams is called ‘pig butchering.’
Pig butchering is a type of social engineering scam that targets those interested in cryptocurrency investments. Criminals convince victims to invest large sums of money to the account of the scammer in exchange for supposed cryptocurrency returns.
Cybercriminals call their victims ‘pigs’ — a derogatory term which means ‘stupid or fools’ because of the ease by which they fool them into their socially engineered tactics–using social media, emails or even telephone calls. The scammers typically start by building a relationship with the victim, often through online dating apps or social media. Once they have gained the victim’s trust, they will convince them to invest in a cryptocurrency platform or project.
“Scammers typically initiate interactions through a seemingly friendly chat sent to the wrong person. This a common tactic that we’ve seen victims fall for across the globe, including the Philippines, as scammers try to cultivate relationships over messaging apps,” Ian Felipe, Trend Micro Philippines Country Manager said.
The Interpol said that pig butchering involves romance scams, phishing, sextortion, leading to investment frauds, cryptocurrency scams. There is also money laundering activities directly linked to illegal online gaming and betting.
This kind of modus operandi is prevalent globally.
“We’ve seen some similarities across the globe… Recently, we’ve seen scammers become more creative by leveraging group chats. Adding people to a fake investment group chat allows them to cast a wider net and identify potential victims with greater efficiency,” Felipe added.
Felipe explains that based on Trend Micro investigations, scammers use a fake profile, curated specifically to interest or attract potential targets. This is also a way for them to hide their true identities. This strategy traces back to the origins of pig-butchering scams, which started as romance scams that evolved into cryptocurrency investment scams. Fraudulent actors would create fake profiles of attractive people to lure their victims romantically.
The use of cryptocurrencies is universal when it comes to pig-butchering scams.
In their chats, scammers would talk about foreign exchange, investments, etc., however the final action would entail victims investing in a fake brokerage platform with cryptocurrencies. This gives the scammers leverage since cryptocurrencies are quite challenging to trace and reversing a transaction would require law enforcement to contact the original broker where the funds originated.
Trend Micro’s research into pig-butchering scams reveals that scammers appear to be targeting a more financially established demographic, including professionals with high salaries and individuals nearing retirement.
According to a recent report by the Federal Bureau of Investigation’s Internet Crime Complaint Centre (IC3), victims of these scams typically fall under the 30 to 49 age range, further highlighting scammers’ focus on individuals likely to have greater financial resources. In our study on pig-butchering scams, we found that 40% of all transactions made to a cryptocurrency wallet controlled by pig-butchering scammers range from US$1,000 to $9,999, which shows that victims have a sizable amount of money to invest.
As the scammer use fake testimonials and social media posts to create the illusion that the investment is legitimate, victims fall into the trap of the promise high returns on investment or guaranteed profits. However, once the victim has invested their money, the scammers will disappear with the funds.
When asked which are the common cryptocurrencies used or exchanges fake Felipe explained that the popular ones are used for ease and credibility.
“Looking at some of the fake brokerage platforms we investigated, scammers often use BTC, ETH, USDT, and TRX cryptocurrencies. These are stable cryptocurrencies which make them a good choice for funding an account. This could also be part of the scammers’ strategy to reduce suspicion among victims – if victims try to such for these cryptocurrencies, they will see that these are some of the stable ones in circulation. In general, crypto assets are typically anonymized, which is why it’s commonly used by malicious actors to launder financial gains with minimal chances of detection,” Felipe explained.
He added that in the Philippines the lack of standardization of cryptocurrency regulations among countries in Southeast Asia may one reason why pig butchering is widespread here. He however added that the Philippine government has been making efforts in terms of national policies on cryptocurrencies.
“We already have an existing comprehensive regulatory framework for virtual currency exchanges, and a mandate to register virtual currency exchanges with the Philippine Central Cank and adhere to anti-money laundering (AML) and counter-terrorism financing (CTF) regulations. Recently, new guidelines on cryptocurrencies and digital financial products were proposed to amplify regulations, inspections, and surveillance of the market. Still, challenges can be faced due to the guaranteed privacy and anonymity of cryptocurrencies,” Felipe narrated.
Pig butchering scams are often very successful because they are able to gain the victim’s trust. The scammers are often very good at manipulating people, and they may use a variety of techniques to convince the victim to invest their money.But all is not lost.
Last November, the cybercrime division of the International Police (Interpol) ran a cyber sting operation codenamed “Haechi III” which seized about $130,000,000 in cash, virtual assets from cyber criminals and money laundering scams and succeeded in arresting over 1000 of suspects.
