Romance Scam+Crypto=Pig Butchering
Romance scams have been around since, well, there has been romance. But there is a new version of the scam traced to the Chinese mafia.
Start with the traditional online dating site romance scam. Chat with your mark, flirt, but don’t actually meet in person. They typically target shy, lonely people – preferably with money – who can be convinced fairly easily that not meeting in person is okay. This is pretty important since the person who is targeting the mark doesn’t really exist or is not as represented on the dating app.
What is new is adding cryptocurrency trading into the mix. You can probably figure out how it works. The scammer starts chatting with the mark about cryptocurrency and how much money she (in this case) has made in the last few months. The mark gets excited about making money (hence the pig analogy – actually they blew the analogy, but I will explain that later). The scammer tells the mark about this app that the scammer is using to make all this money.
What the mark doesn’t know is that the scammer controls the app.
The mark makes some trades in the app and makes some crypto profit. The scammer allows the mark to withdraw that money so that that app seems legit.
The mark starts getting greedy and invests more and more money using the app, but for whatever reason (likely over confidence) does not withdraw any of the profits.
The profits (at least in the app) continue to build and finally the mark tries to cash out. This is where the scammer comes up with excuses (in the disguise of the app owner) – coming up with different reasons why the mark can’t cash out. In one case, the mark was told that he had to pay back the money that the site loaned him (I am guessing there is a margin play here too) before he can cash out. That is, of course, a chicken and egg problem. I can pay you if I can cash out but I can’t cash out until I pay you. If the victim does give the scammer the extra money to pay the loan, the scammer comes up with a different reason. And keeps the mark’s additional money.
One victim lost over a million and a half dollars in this scam (see the 7News article below).
Remember that none of this crypto stuff is insured and very little of it is regulated. It is definitely buyer beware.
Back to the name. The name of the scam in Chinese is sha zhu pan or “pig butchering”.
Remember that the US expression is pigs get fat and hogs get slaughtered, but I suspect that distinction is lost in translation. But the expression is accurate. If you take some profits and then exit (get fat), then that might work, or at least you will lose less money. But because the marks get greedy (hoggish), they get slaughtered.
I would not be surprised if the mark made $50k or $100k that the scammers would come up with an excuse to not pay out, but the mark gets greedy and gets sucked into the scam and stops thinking rationally.
People need to understand that apps are not controlled and you, for the most part, have no idea who is running an app or what motive they have. Be careful.
Credit: The US Sun and Denver 7 News
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