Pig butchering scam

Apig butchering scam(in Chinesesha zhu panorshazhupan,(Chinese:杀猪盘), translated askilling pig game)is a type of long-termscamandinvestment fraudin which the victim is gradually lured into making increasing contributions, usually in the form ofcryptocurrency, to a fraudulent cryptocurrency scheme.
Such scams are commonplace on social apps. In October 2023, 12% of Americans using dating apps experienced exposure to this type of fraud, up from 5% in 2018.The scammer builds trust with the victim through online communication, subsequently persuading them to invest in a fraudulent cryptocurrency scheme. The "butchering" or "slaughtering" of the victim transpires when their assets or funds are stolen.
The scam originated inChinain 2016 or earlier,and proliferated inSoutheast Asiaamid theCOVID-19 pandemic. Perpetrators are typically victims of afraud factory,where they are lured to travel internationally under false pretenses,traffickedto another location, and forced to commit the fraud byorganised crimegangs.
Pig-butchering scams originated in 2016 or earlier as a regional scam inChina, originally finding their victims on same-sexdating sitesbefore expanding to opposite-sex dating sites as well. The term "pig butchering" arises from an analogy comparing the initial phase of gaining the victims' trust to the fattening of pigs before slaughtering them.
Themodus operandilater spread throughoutSoutheast Asiaat the height of theCOVID-19 pandemic. InSihanoukville, Cambodia—once a prosperous gambling town—many local gambling gangs transformed casinos intoscam operation centersperforming pig-butchering scams. This was likely a result of a lack of casino attendance on account of the COVID-19 pandemic and the Cambodian government cracking down oncommercial gambling.Many operations are also run from areas ofMyanmarwhich are outside central government control because of 
theongoing civil war, with one important hub being the town ofMyawaddyinKayin State, near theborderwithThailand.According to theUN Human Rights Office, hundreds of thousands of people have been trafficked and are trapped in scam centres in Cambodia and Myanmar, with other operations being run fromLaos, thePhilippinesandThailand.Many of the groups that run pig-butchering scams are overseasChinese criminal syndicatesbased in Southeast Asia, who trafficethnic Chineseand others into fraud factories and force these people to commit the fraud.
Pig-butchering scams gained international momentum through the exploitation ofonline dating appsandsocial media platforms.Scammers crafted elaborate fake identities to establish romantic or emotional connections with victims, thus marking a departure from conventional financial scams by integratingpsychological manipulation. This early phase of these scams primarily targeted local populations but quickly expanded as digital connectivity grew.
The scams evolved significantly with the integration of sophisticated techniques, including the creation of fake onlineinvestment platformsand the use ofsocial engineering. A key aspect of this evolution was the use ofcryptocurrencyfor transactions, which appealed to scammers due to its difficulty to trace and recover. The scams' globalization can be attributed to the increased ubiquity of digital interactions and the rising popularity ofcryptocurrencies, which provided a new avenue for such fraudulent activities on a global scale.
The 2023failureof Heartland Tri-State Bank inElkhart, Kansas, United States, was directly tied to a pig-butchering scam; CEO Shan Hanes was discovered to haveembezzled$47 million from the bank in an attempt to secure his presumed funds. Hanes was charged in federal court with embezzlement in February 2024 and pleaded guilty in May 2024.He was later sentenced to 24 years in prison.
Pig-butchering scams involve a series of meticulously planned steps to deceive and exploit victims, typically focusing oncryptocurrencyinvestment fraud.
Furthermore, the scammers develop fakebrokeragewebsites andmobile applicationsto add legitimacy to their scheme, making it difficult for victims to distinguish them from genuine platforms. The reportunderscores the impact of these scams, with millions of dollars lost by victims, and emphasizes the importance of caution and vigilance in online investments.
TheIRShas issued warnings about the rising prevalence of these scams, particularly targeting U.S. taxpayers. The agency notes that losses often reach hundreds of thousands of dollars, with some victims losing as much as $2 million.
An important aspect of countering pig-butchering scams involves tracing stolencryptocurrencies. This process is intricate due to thedecentralizedand pseudo-anonymous nature of cryptocurrencies, and requires specialised tools and knowledge.In 2022, for example, the FBI set up the Virtual Assets Unit, with the express remit of addressing crypto-based financial crime.
The process typically begins with the collection of relevant transaction data, such as transaction IDs and wallet addresses associated with the scam. Advancedblockchain analysistools are then employed to trace the path of the stolen funds. These tools can identify patterns and link different transactions to specific wallets, which are essential in building a case against the perpetrators.
The scam typically combines elements ofromanceandinvestment fraud, and often involve the gradual building of a relationship with the victim, leading to significant financial losses. Victims are lured into investing in fake opportunities, particularly withcryptocurrencies, and end up losing large sums of money. The psychological impact is equally severe, as victims not only face financial ruin but also the loss of what they perceived as a genuine, intimate relationship. These type of scams are particularly insidious because they play on both the financial aspirations and emotional needs of individuals, leaving victims feeling betrayed, embarrassed, and reluctant to discuss their experience with others or report it to authorities.
The 2023 Chinese movieNo More Betsis a crime drama based on interviews with real victims of the scams. It garnered attention and success in China, bringing the scams and the issues related to them to the forefront of public discourse. The movie highlights the plight of the numerous low-level scammers who are themselves victims of coercion, having been lured from their homes by promises of stable employment, only to find themselves trapped and forced into committing these scams.