If you’re considering an investment in cryptocurrency, make sure you’re purchasing through a trusted resource — and if a new “friend” tells you about a trading site, be extremely careful.
Over the past four years, security experts have seen a rapid rise in pig butchering scams. Pig butchering refers to the slow process of convincing a target to trust the attacker by making an investment, usually in cryptocurrency.
Here’s the typical process for a pig butchering con:
- First Contact – The target receives an unsolicited message, usually through a text message, email, or social media account, from the bad actor. The message will often use a case of mistaken identity to start a conversation. For example, “Hello, Janet, how are you doing today?”
- Establishing Communication – The target responds to the message, telling the bad actor that they’ve got the wrong number. The bad actor apologizes, but keeps the conversation going.
- “Fattening Up” The Target – Over a long period of time, the bad actor convinces the target to trust them. Eventually, the bad actor discusses an “investment opportunity,” which is typically a cryptocurrency purchase.
- “Slaughtering” The Target – The victim “invests” in cryptocurrency through a website supplied by the bad actor. Scam websites may be extremely sophisticated, and may look indistinguishable from reputable cryptocurrency exchanges.
- Ending The Scam – The bad actor encourages the victim to keep investing. When the victim tries to pull their money off of the exchange, they’re asked to provide a “tax payment” to free the funds.
Pig butchering scams can be extraordinarily detailed. Websites may require two-factor authentication (2FA), and the bad actors may provide pictures and other “proof” of identification to win the victim’s trust.
And while highly sophisticated scams take time to execute, they can be extremely profitable for fraudsters. In early 2024, a pig butchering scam apparently brought down Heartland Tri-State Bank, as CEO Shan Hanes reportedly transferred $47.1 million of the bank’s funds to a scam cryptocurrency website.
Avoiding Pig Butchering Scams When Purchasing Crypto
If you decide to buy cryptocurrency, make sure you’re doing so for the right reasons. Weigh your investments carefully and keep these tips in mind:
- Only purchase cryptocurrency from a trusted resource. Research your options, and remember that any cryptocurrency exchange could fail.
- Keeping your crypto in a cold (offline) wallet provides the best protection from scams, exchange collapses, and other threats. If a website will not allow you to transfer funds to a private wallet, it’s probably a scam.
- Don’t invest more than you’re willing to lose. While cryptocurrency can be a profitable investment, it requires high risk tolerance — any of the technologies (including Bitcoin and Ethereum) could drastically lose their value over a short period of time.
- Make sure your friends and family are aware of the prevalence of pig butchering, phishing, and other common confidence scams. Victims are particularly prone to attacks if they are isolated — but sophisticated attacks could compromise virtually anyone.
- As a general rule, avoid responding to text messages from unknown numbers.
- Double-check URLs. Scam websites may have URLs that are similar to, but not identical to, well-known websites and crypto exchanges.
Victims of pig butchering scams should contact their IRS Criminal Investigation (CI) field office. To find your area’s office, visit the IRS CI web portal.
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