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Pig Butchering Crypto Scams

crypto fraud crypto investing crypto scams May 26, 2023

Don't morph into a crypto PIG

By now you've probably heard about pig butchering crypto scams, which are a subset of crypto scamming. I've studied frauds for the last 12 years and I'm especially intrigued by the anatomy of crypto scams and the psychology of the victims.

I'm also a Certified Fraud Examiner who doesn't investigate frauds but rather uses the intel to keep myself and others from stepping into quicksand. Just like first aid you can never over study security and safety precautions in crypto. I'll be writing about crypto scams quite a bit because that's one of the big ways I contribute to the space. This pig butchering blog is my debut of the crypto fraud series.


Watch my video on pig butchering crypto scams

Let’s examine the 4 stages of the scam. 

Stage 1: Grooming 

What is pig butchering in crypto? Pig butchering is the English translation of a term originating in Southeast Asia scam shops. One typical rouse starts in dating apps and is sometimes called a romance scam. The victim is seeking romance so they are perhaps perfectly poised to take the bait more than other version of pig butchering. The US Department of Justice claims these scams are in the billions.

Scam artists cleverly groom the victim and build friendships over a long period of time. The investment in relationship building is the worth the payoff with million dollar pay days for the scammer. 

"The Misdial"

Another version of pig butchering involves the fake misdial of a phone call or a text message. The scam artists act like they intended to call their fake friend John when they message the victim. The message may be something like, "Hey John sorry I couldn't make the gym today." The scammer will invent every reason in the book to keep a dialogue going. Perhaps some fake "misdialed" texts you've received make more sense now in hindsight. This one really blows my mind apart because the probability of creating a lifelong friendship from a misdial is essentially zero. How someone can get duped for thousands or millions from 8 words in an erroneous test message explains why I'm forever fascinated by exploring the psychology of the victim. 

Stage 2: The Metamorphosis: Going from human to fat pig

Where does the pig metaphor come from? Pork bellies are a tradable commodity so as economics goes the fatter the pig the bigger the price. A fat pig big equals a happy farmer with dollars signs in his eyes. Every time the victim replies to a text on tinder or a misdial scam, they gain another few pounds. Instead of food scraps for pigs, human victims fatten up from increasing trust with every conversation. The trust builds up to a point where the scam artist introduces a fake crypto exchange or investment site with insane returns. At this point the human victim has started morphing into a pig with snout, ears and thick pink skin. They've consumed so much trust they're now weighing in at 400 pounds and rather easily send hundreds of thousands of crypto of fiat (to turn into crypto) to the fake investment site. Only a really good friend would offer 150% monthly returns.

Stage 3: The Fattening: A relentless attack

The scam is just getting started after the first investment contribution. The victim will be able withdrawal some of their insane returns long enough to fatten the pig up to 500 pounds. Now the victim is thinking like a pig with far less than human intelligence, "If I can withdraw funds, this has to be trustworthy." Of course, this is subconscious thought so it reinforces the next bigger "investment." Round 2, 3 and 4 investments are bigger dollar values than the first investment and the now the pig is 700 pounds and ready for market. The big piggy finally gets a whiff of scam when they can't withdraw funds, however the scam artist promises to release the funds with additional contributions for taxes or other reasons. 

Stage 4: The Axe: Slaughter and disappear

Why feed a pig any further when they're at maximum weight and market price? The smart farmer sends these pigs to market. The scam artist farmer goes in for the slaughter and disappears. The victim has been psychologically slaughtered when the communication stops and they realize the trust was all a rouse. The victim gets burned for thousands or millions but the violation of trust is equally expensive. The scam artist is only satisfied for slaughter after getting all the victim’s funds. 

This is a classic insult to injury, a double whammy: 

1) Loss of assets

2) Loss of trust 

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What is the value of trust?

You can't put a price on trust. Trust is part of the social contract from which we all operate. The wound from pig butchering crypto style may never heal which handicaps the victim from starting over potentially from decades of saving and investing. Now you'd have to work you ass off way harder than before to make up for lost investment time (which is basically impossible for most people) while not being able to trust anyone in the process. Whew that's rough. 

A few pig butchering examples:

Jan Yan lost $1.6MM to a "misdial" text message. The worst part is she invested her retirement funds, her kids college funds and borrowed money from friends and family. (Note: I could only find this one on a WSJ article behind a paywall) This is the worst butchering I've ever seen. 

I was a victim of ‘pig butchering’ — I got scammed out of $450K

Don't turn into a pig 

Here are a few takeaways to avoid falling prey. 

  •  Read every article you see about pig butchering and crypto scams. The more you read the more awareness you have. 
  •  Bounce investment ideas to trusted friends, colleagues, spouses, masterminds etc. before diving in solo with your hard-earned money. Most victims are not in communication with other people. Two decision makers are better than one as the saying goes. 
  •  Most people seek out investment opportunities. Investor seeks the investment NOT the other way around. Remind yourself that strangers offering once in lifetime deals are out of process and not the normal path. 

There's much more to consider which I will continue to cover. 

In the meantime, remember:

Your goal is always to get a Crypto Bullseye™.

Yours in Crypto, 

Kirk David Phillips, CPA, CMA, CFE, CBP

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