Pig butchering scams are on the rise; the number of cases reported to Binance increased by 100.5% from 2022 to 2023 to date.
To avoid scams, investors should be skeptical of unsolicited communications, do thorough research on investment opportunities they are offered, and protect their personal data.
Binance collaborates with law enforcement, provides investigative training, and participates in anti-cybercrime workshops, leveraging blockchain technology to combat scams.
Pig butchering scams are on the rise. Learn how you can keep yourself safe and how Binance is protecting its users.
With the number of reported cases doubling over the past year, the so-called “pig butchering” scams are certainly something crypto users and the broader public need to be on the lookout for. Blockchain technology and digital assets are seeing increased adoption, and with higher demand and recognition often comes an increase in attention from scammers. The pig butchering variety is among the most pervasive and dangerous scams.
Yet, a combination of users’ adherence to security best practices and the work that Binance does to protect its ecosystem is the best recipe for keeping us all safe from pig butchering attempts.
What Is a Pig Butchering Scam?
A pig butchering scam is a type of investment fraud that targets inexperienced or unwary investors. In this scheme, scammers lure their victims in with promises of high returns and the glamorous lifestyle that comes with them.
The fraudsters often creep into their victims’ favor by building trust over time, studying the victims closely, and showing them the initial "profits" on their investment. Once the victims' confidence is gained and they invest more substantial amounts of money on the fraudulent platform, the scammers suddenly disappear with the victims' funds, leaving no trace or means of recovering the lost investments.
The scheme is called a pig butchering scam because the fraudsters "fatten their victims up" with fake gains before "slaughtering" them for the rest of their money. It is important to note that similar techniques have been used for years in investment and romance fraud schemes, and consumers should be aware that these scams are not limited to the cryptocurrency space.
How Are Scammers Fooling People?
Scammers use a variety of tactics and plans to fool their victims into taking up fake investment opportunities. As mentioned, these tactics are nothing new and have been used across a spectrum of financial frauds and cons over at least several decades.
Pig butchering scams borrow a variety of techniques from other types of investment frauds. It is important that consumers familiarize themselves with common scam types so they can identify the techniques used.
Social engineering scams: Using psychological manipulation, scammers convince victims to provide sensitive information, access to accounts, or directly transfer funds. Common tactics include impersonating a reputable entity like an exchange or a customer service representative to gain the victim's trust.
Romance scams: Scammers prey on victims seeking romantic relationships, usually through online dating platforms or social media. Once trust is built, they manipulate the victim into investing in bogus cryptocurrencies or sharing private keys to their digital wallets, eventually stealing their assets.
Ponzi schemes: Scammers entice investors with promises of high returns, while secretly relying on new investors' funds to pay profits to earlier investors. When new investment dries up, the scheme collapses, and investors lose their money.
Exit scams: Scammers launch seemingly legitimate projects or exchanges, gain user trust, and then abruptly shut down the platform and disappear with users' funds.
Pump and dump schemes: Organized groups artificially inflate a cryptocurrency's value through coordinated buying, false news, or promotional campaigns, only to sell at the peak, leaving unsuspecting investors with an asset whose value has suddenly dropped.
Why Are Pig Butchering Scams on the Rise?
Pig butchering scams have experienced a worrying upsurge in the crypto space, fueled by the growing interest in digital-asset investments. This rise is part of an overall increase in investment scams across all finance-related industries.
In 2022, investment scams were the most “expensive” schemes reported to the FBI's Internet Crime Complaint Center. Losses from investment fraud skyrocketed from $1.45 billion in 2021 to $3.31 billion in 2022, demonstrating a staggering 127% increase. This rise has captured the attention of both investors and regulatory authorities.
A significant portion of these investment scams involved crypto. Fraud associated with cryptocurrency investments rose from $907 million in 2021 to an astounding $2.57 billion in 2022, marking a 183% increase.
Binance’s own internal data and research has seen a roughly 100% increase in the number of reported pig butchering scams from 2022 to 2023. This figure is almost certain to increase as more cases are reported throughout the rest of 2023.
This surge in crypto-related scams can be connected to the influx of inexperienced investors entering the market, with scammers seizing the opportunity to exploit their lack of knowledge about a new asset class.
It is important to remember, however, that anyone can become a fraud victim, including more experienced investors and knowledgeable crypto users.
How to Identify the Warning Signs and Avoid Pig Butchering Scams
By following some simple tips, you can easily reduce the chances of falling victim to a pig butchering scam. You’ll also be able to better distinguish a legitimate investment opportunity from one that’s likely looking to separate you from your assets.
Be cautious of offers that seem too good to be true: High returns with low or no risk are often a red flag. However, it can be difficult to determine what’s actually too good to be true, thus it is necessary to verify with trusted sources of information.
Conduct thorough research: Research the investment opportunity, company, individuals involved, and the specific market segment. Check online reviews, forums, and social media for others' experiences and feedback. Ask yourself if you really understand the proposal, offer, investment, etc. in sufficient detail.
Verify the credibility: Ensure that the investment platform or individual has proper licenses, registrations, and is authorized to operate in your jurisdiction. You should only invest through official channels and not social media platforms or individuals.
Don't rush into decisions: Scammers often create a sense of urgency to pressure you into making hasty decisions. Take your time to understand the investment and avoid getting pushed into making immediate commitments. Consider if the person you’re communicating with is in any way pressuring you to act or make you feel like you are missing out.
Beware of secretive or complex schemes: Scammers may present their investments as exclusive opportunities or use complex jargon to make them seem more legitimate. Always seek clarity and transparency in any investment opportunity.
Protect your personal information: Never share sensitive personal or financial information, such as passwords or private keys, with anyone, even if they claim to represent a trusted entity. Consider using a password manager and learning more about proper cyber hygiene to protect yourself and those you care for.
Be skeptical of unsolicited offers: If you receive an unsolicited email, message, or call offering an investment opportunity, approach it with caution and doubt, even if they claim to have been referred by someone you know. Always be cautious of clicking on any links or downloading any files that accompany such communications.
Monitor your investments: Keep track of your investments and maintain open communication with the investment platform or individual. Frequent unexplained changes or difficulties getting information can be warning signs.
How Binance Works With Law Enforcement to Combat Scammers
At Binance, we are unwaveringly committed to combating scams and ensuring the safety of our users. In this pursuit, we are dedicated to working closely with global law enforcement agencies to protect the blockchain ecosystem. Our collaboration with these entities helps strengthen efforts to safeguard the rapidly evolving cryptocurrency landscape, making Binance a more secure platform for users and their investments.
Ensuring the safety of our users and cultivating a supportive environment goes beyond just Binance's internal efforts. Law enforcement agencies across the globe strive to protect crypto users, and it's essential that we proactively assist them by providing comprehensive investigative training.
Binance’s Investigations team, comprising leading security experts and former law enforcement agents, spearheads this training program. Each day-long session features in-person workshops covering fundamental blockchain concepts, as well as an in-depth understanding of the legal and regulatory aspects of crypto.
In 2022, Binance organized and took part in over 70 anti-cybercrime workshops designed to empower global investigators and cybercrime fighters. By lending our support to law enforcement initiatives, we not only help protect our users and the wider ecosystem but also make it increasingly difficult for malicious actors to operate successfully. This ongoing collaboration is integral to our mission of cultivating a more secure blockchain community.
Law Enforcement Support: A $112 Million Case Study
Binance works with law enforcement agencies and authorities around the world every day to identify and fight illicit actors in the crypto ecosystem. Recently, we supported the United States’ Federal Bureau of Investigation (FBI) and Department of Justice (DOJ) in a significant pig butchering case where over $112 million in funds were seized.
In addition to the proactive investigative and monitoring work done by our compliance and security teams, Binance also works with law enforcement to prevent criminals from benefiting from their ill-gotten gains. Our investigations team took swift action by identifying and restricting the flow of illicit funds through the platform. This directly helped support the recovery of funds lost by a number of the victims. The team’s efforts complement the work accomplished by federal authorities.
This is just one of many cases where the Binance Investigations team supported law enforcement in taking action against pig butchering scams and helping victims recover funds. Binance continues to work closely with law enforcement and regulators to raise more awareness of scams including pig butchering cases. This drive helps raise user awareness across the globe and prevent additional crimes from occurring. On Binance’s Crossing the Chain podcast, Erin West, Deputy District Attorney in Santa Clara County, California, and prosecutor for REACT investigative force, commented:
We’re finding that Binance and other platforms are very open to being helpful, very open to saying, ‘We don’t want dirty money on our platform, either. We don’t want bad actors moving money on our platform and we will help.’
What to Do If You’re a Victim of a Scam
If a Binance user becomes a victim of a crime, they should take the following steps:
Report the incident immediately: Contact Binance Customer Support as soon as possible to report the issue. Prompt reporting might help minimize potential losses.
Freeze your account: Request Binance to temporarily freeze your account to prevent further unauthorized activity.
Change login credentials: Update your password, API keys, and enable two-factor authentication (if not already active) to secure your account.
Report the incident to local authorities: Depending on the severity of the crime, you may need to contact your local authorities and report the incident. They may have cybercrime divisions that can provide additional assistance.
Educate yourself on security best practices: It's essential to learn how to protect yourself against scams and cyber crimes proactively. Binance offers a wealth of information on the security page to help users stay informed about the best practices and keep their assets secure.
Remember, always stay vigilant and pay attention to the security of your account. Double-check any information and sources claiming to be related to Binance before taking any action.
Blockchain Is Our Ally in Combating Pig Butchering Scams
Pig butchering scams have been around long before cryptocurrencies entered the scene. These age-old schemes have previously manifested in other investment domains like securities, real estate, and commodities trading. Wherever there’s an opportunity to promise high returns with minimal risks, a pig butchering scam can take place.
Now, the good news here is that blockchain makes it easier to track and combat these scams as transactions on the blockchain are public and traceable. The technology is known for its transparency and inability for the records to be altered, which means that financial transactions are traceable and publicly visible. This public record allows for easier identification and monitoring of potentially suspicious activity.
As a result, blockchain technology offers us a powerful tool in gathering essential evidence and taking action against scammers, paving the way for a more secure and safer investment environment. Stay cautious and always do thorough research, but rest assured that the unique properties of blockchain technology are working to your advantage in this fight against scams.