Rising Crypto-based ‘Pig Butchering’ Scams Worry FBI, Interpol ⋆ ZyCrypto

A recent international investigative report has linked over £100 million swindled in crypto-based romance scams — oddly known as pig butchering — to fictitious companies in the UK.

Pig Butchering is a systematic type of scam where unsuspecting victims are weaned for a while, to build trust and confidence before fleecing them of their hard-earned money. 

How pig butchering scam works.

In the case of crypto, skilled swindlers are deployed to dating sites or language-learning apps to contact unsuspecting victims and build rapport. At some point in the discourse, cryptocurrency is brought up, and a trading brokerage or exchange, largely controlled by a syndicate of fraudsters, is suggested to the victim. 

At the onset, the scam exchange fulfils its obligation to offer juicy returns on investment. The aim is to gain trust and encourage more financial commitments by the victim in the hopes of bigger gains that never come. 

Some victims reported scammers had linked them to third-party brokerages with promised auto-trading features hosted on the Forex trading platform, MetaTrader, largely known for its lax KYC scrutiny procedures. Apple has since de-platformed the app from its store. 

Over 160 UK-based crypto companies have been linked to such scams over the past few years with many of them taking advantage of the government’s porous business due diligence to float their scam enterprise. According to the UK Guardian, further scrutiny reveals multiple businesses linked to Chinese owners and tied to similar addresses without physical businesses. 

Who runs these Pig Butchering Scams?

– A ring of Asian-based scam sweatshops. In September 2022, ProRepublica reported a raid on multiple cyberscam compounds in Cambodia. Hundreds of captured youngsters freed by the local Police had confessed to being smuggled from across different parts of Asia to countries such as Laos, Myanmar and Cambodia; with the promise of non-existent jobs, only to be tortured and forced into online scams. It is much common to find obscure multistoreys with crudely fortified windows, swarming with thousands of young Asians in the Sihanoukville area of Southwest Cambodia—a sight that has earned the city the title of ‘the cyber scam capital of the world.’

UK’s Tightening Scrutiny

Following a recent report that showed 86% of UK crypto firms as unqualified, the FCA is doubling down efforts to sanitize its digital finance sector. However, such efforts need to be intensified, especially among businesses successfully operating under the radar, to patch criminal loopholes and rid the region of bad actors swindling unsuspecting victims in pig butchering scams.