Crypto in 2023: What is the Pig Butchering Crypto Scam that security experts want investors to look out for

   2022-12-27 04:12

2022 wasn’t a great year for the crypto industry. Investors saw a huge chunk of their wealth get wiped out in a matter of days. While the market stabilised a little towards August, the fall of crypto exchanges like FTX, and other trading platforms going bankrupt has shaken up the confidence of some of the most seasoned investors as well.

What is the Pig Butchering Crypto Scam that security experts want investors to look out for

However early adopters of crypto will understand, that like all asset classes, investing in crypto is a game that has to be played in the long run. Crypto is bound to bounce back up in a few years. It may not reach the record highs that we had seen during 2021, but it will be significantly higher than where it is today. 

Because crypto attracts all sorts of investors, and always has a sizeable portion of novice investors who are just starting out, scammers go out of their way to target them. 

We spoke to a cyber security expert to get the down low on pig-butchering, how the scam works, and what other scams should investors be wary of in 2023.

What is the Pig-butchering scam?
Pig Butchering which is also known as Sha Zhu Pan is one of the fastest emerging scams that has plagued new crypto investors in 2022 and is expected to blow up massively next year.

“It is very prevalent on platforms where people discuss currency and trading,” says Satnam Narang, a Senior Staff Research Engineer with Tenable, one of the world’s largest cybersecurity companies.

The basic idea is to honeypot unsuspecting investors, using dating apps. “Scammers use apps like WhatsApp, Telegram, and even Tinder. The scammers seek to gain the victims’ trust and develop fake relationships. The victims are then cajoled into investing in an instrument or a scheme that is bogus. Typically, the instrument would be a cryptocurrency, but it may also include investing in Forex or some precious metal,” said Narang.

The reason why this scam is called pig butchering is simple – like a hog is fed generously to fatten it up before it is butchered, the victim in such scams is also overwhelmingly showered with love, before being scammed.

How did the pig-butchering scam originate? Is it prolific in India?
“The scam started in China and has been widespread ever since. India is no stranger to such scams. The pig butchering scam is a long con, which makes it hard to detect immediately or become apparent to victims,” said Narang. “This could be one of the reasons why many people have been duped,” he added

How does the pig-butchering scam work?
The scammers engage their victims through false promises of a relationship and get them hooked. “This is the first step and is intended to gain their trust before they are led to the slaughterhouse, which in the case of this scam is where they promise to help them earn a large sum of money through fake cryptocurrency or another type of investment platform,” Narang said.  Once victims let their guard down and trust the perpetrators, the long con begins to pay off. 

“Scammers will then start talking about their successful investment ventures and build curiosity in the victims. They will then manipulate their victims into a series of fake investments by leveraging fake websites built to resemble real investment sites or cryptocurrency pages. They will even walk the victims through the process of purchasing cryptocurrencies from legitimate platforms like Coinbase and others in order to send them to their fraudulent investment sites,” said Narang.  

The investment websites which are often controlled by attackers typically display falsified dollar amounts, convincing the victim that their investments will be profitable.”When victims want their money back, scammers will say they’ve encountered a tax penalty and in turn extract huge amounts of money from victims. Once the victims have lost money, the fake investment websites will not work and scammers ghost the victims,” said Narang.

How does one protect themselves from such scams?
People must be very careful while receiving unsolicited messages on WhatsApp or SMS, claiming to be for someone else or a wrong number,” said Narang. Those on dating apps must be wary of prospects very eager to move off the platform to WhatsApp or other platforms like Telegram to continue the conversation.

If you are ever at the receiving end of a get-rich-quick type of scheme, most often, you would end up losing your money. The best solution would be to disengage from these fake opportunities for wealth,” Narang added. If you are a victim of pig butchering, it’s best to contact local law enforcement to inform them as well as CERT-In. 

What other scams will be huge in 2023?
“With the predicted economic downturn in India and other major economies in the world in 2023, unemployment and the rising cost of living are the biggest concerns for people. It’s during such times that fake investment scams promising high returns run rampant,” said Narang. 

In 2023, scammers are expected to use dating apps, social media platforms and messaging apps like WhatsApp and Telegram to lure victims into scams and steal their money. Cryptocurrency investors in particular must be aware of the authenticity of the trading platform and choose a compliant exchange that follows proper Know Your Customer/Know Your Client (KYC) verification methods.

“Before investing your money, it’s best to do your own research (DYOR) and validate information about proposed investment websites or cryptocurrency exchanges and understand the financial health of any investment,” added Narang.

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