Cypto "Pig Butchering" Scam on Rise
About the scam
The scheme earned its crude name because the scams “resemble the practice of fattening a hog before slaughter.” Scammers create fictitious personas—possibly employing deepfake images—to establish contact with potential victims (“pigs”), typically by text messages, social media, or dating apps. Over time, scammers foster seemingly authentic relationships with victims through frequent and friendly exchanges (“fattening the pigs”).
After forming relationships, the scammer commonly weaves cryptocurrency into their conversations. Often, scammers do not ask for money or cryptocurrency directly; instead, they offer to guide victims’ investment strategies and instruct users to send money to various platforms (which are developed or controlled by the scammer). This is when the “butchering” begins.
Victims may initially respond by sending small amounts to a cryptocurrency exchange. To sustain the ruse, scammers will present false account information purportedly showing victims’ investments are growing. Scammers may even allow victims to cash out a portion of their initial investment to maintain a semblance of authenticity. Scammers will continue to pressure victims to send money until they are “bled dry.”
It is not uncommon for victims to try to cash out their investments only to be told that they must first pay exorbitant fees or taxes. By this point, the scam has run its course, the money is gone, and scammers have moved on to their next victims. Tragically, there are countless stories of victims losing their entire life savings to these schemes.
The people behind the scams
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‘Pig butchering’ links to crypto demand policy response
As described in a United Nations report, the primary hub for this criminal activity is the Mekong region of Southeast Asia. Here, an increasing number of casinos blend with ungoverned borders and armed groups engaged in a long-running civil conflict in Myanmar to create the ideal conditions for massive money-laundering operations. As more criminal groups expand into online fraud, the casinos offer endless opportunities to make ill-gotten gains seem legitimate while bringing in funds to diversify and sustain their illegal empires.
More disturbingly, these operations rely on forced labor, with an estimated 220,000 people forced to execute these scams in Cambodia and Myanmar alone. Criminal groups frequently use social media to bait unwitting victims to travel to Southeast Asia with the false promise of new careers. Once they arrive, they are then taken hostage and compelled to run pig butchering scams, often under the threat of physical violence. Like the pig butchering victims themselves, the families of people held captive by these gangs are often forced to pay ransoms in cryptocurrency to free their loved ones.
The impact of pig butchering
The estimated scale of this fraud exceeds many other major financial crimes, including business email compromise. In fact, the FBI’s 2023 Internet Crime Complaint Report revealed that investment scams claimed the most substantial losses out of all crimes tracked by the agency. Last year, losses soared 38% to reach $4.57 billion, with crypto-related investment fraud accounting for almost 90% of that total.
However, these figures only reflect the losses reported to law enforcement; the true toll is likely much higher. Indeed, researchers at the University of Texas said pig butchering scams have netted at least $75.3 billion since January 2020, and they conceded that their analysis could fall short of the total.
Whatever the genuine number may be, the impact is undeniable: Scammers are successfully seizing vast sums of money from numerous victims, and crypto serves as the primary conduit for their illicit gains.
ICBA will continue working to inform community banks and the broader public on the risks posed by pig butchering and other crypto-based scams while we advocate a policy response to these security threats.
Originally published by Independent Community Bankers of America (ICBA) and written by Brian Laverdure, Senior Vice President of digital assets and innovation policy with ICBA.