[ad_1]
The latest blog from CertiK details the depth of pig butchery in the crypto industry.
One increasingly common form of cryptocurrency fraud is the euphemistically called “pig slaughtering” scheme. Swineslaughter involves fraudsters posing as successful traders to then lure unsuspecting victims into investing in them and reaping incredible returns. Scammers first take the time to build trust with their victims on social media, text messages or dating apps, before promising to teach them how to multiply their life savings with cryptocurrencies, forex trading or other financial markets. After the scammer “feeds” his victims (pigs) with promises of huge profits, they butcher them, cutting off communication and fleeing with the money invested by unsuspecting targets.
Scammers adopt a variety of guises aimed at building trust with their targets, including posing as mutual friends or former colleagues of the victim in order to strike up a seemingly legitimate conversation. Pig slaughter scammers will provide fake websites and apps that allow victims to allegedly track their investments. These sites give the impression that the initial investment is growing quickly. However, when victims try to cash out their refunds, scammers delay by asking for more information or informing “investors” that they must pay income tax or some other fee to withdraw. The luckier victims will leave here, but those who take this bait simply lose even more money. Ultimately, the victims are unable to recover the money they invested, and the scammers cut off contact with the victims, completing the scam.
The Rise of Pig Slaughter Scams
According to the FBI, hog slaughter scams resulted in more than $429 million in losses in 2021. More than 75% of victims lost at least half of their net worth, and roughly one-third went into debt as a result of hog slaughter scams.
The Global Anti-Fraud Organization reported that 67% of victims of pig slaughter scams were women between the ages of 25 and 40, who lost an average of $121,926. Similar studies conducted in Australia and China reflect this skew, with approximately 69% of reported victims being female.
Perhaps surprisingly, 32% of pig slaughter victims have a bachelor’s degree. This is a major overrepresentation, as only 13.1% of the US population has a college degree.
The global anti-fraud organization also found that victims of hog slaughter schemes were typically unfamiliar with how regulated brokers operated, were being targeted at a vulnerable time in their lives and had significant savings to invest.
How to detect and avoid pig slaughter schemes
The FBI has released four tips on how to avoid falling victim to hog slaughter and similar scams.
Validate investment opportunity claims
Conduct comprehensive due diligence on all claims related to investment opportunities. Pig slaughter scammers often approach their victims for unrelated purposes to build trust and introduce false investment prospects only later when they have established a relationship with the victims. Be extremely cautious when strangers or long-lost contacts reach out to suggest investment opportunities.
Double check domain names
Many pig slaughter scammers create domains that mimic the websites of legitimate financial institutions. Always check domain names, especially for cryptocurrency exchanges, to detect subtle changes that characterize fake websites.
Do not download suspicious software or applications
Stop and evaluate your investment in apps or software before you download anything. To confirm the validity of the app, pay attention to the details provided in the app stores, such as the developer, seller and description of the app. If the developer’s name is unknown, contains typos, or closely mimics a well-known brand or organization, it may be a fake app. Most app stores contain links to the developer’s website, so always check that these links point to an authentic site before proceeding. Be careful if unknown websites ask you to download apps or software.
If an investment opportunity sounds too good, it probably is
The golden rule of investment due diligence applies here. If an investment opportunity sounds too good to be true, it probably is. Pig slaughter scams often promise a guaranteed return, which should always be considered a major red flag.
Law enforcement action against pig slaughter schemes
On October 13, 2022, the US Department of Justice unsealed the indictment of eleven New York and New Jersey residents for allegedly defrauding victims of approximately $18 million in hog slaughter schemes. The defendants are charged with money laundering conspiracy, wire fraud conspiracy, bank fraud conspiracy, passport fraud conspiracy and aggravated identity theft, among other charges, for their roles in these schemes. This indictment marks the largest indictment against individuals for perpetrating and defrauding victims through pig slaughter schemes.
On November 21, 2022, the US Attorney’s Office for the Eastern District of Virginia announced the seizure of seven domains used in pig slaughter schemes. All these domains are fake versions of the Singapore International Monetary Exchange website.
The victims lost over $10 million in this particular pig slaughter case.
Examining the slaughter of pigs on a chain
Not all pig slaughter scams use cryptocurrency. This can make it difficult to track the flow of funds through the often opaque world of banking. However, for those who do, we can easily use blockchain analysis to trace stolen funds and identify fraudsters’ wallets.
In the aforementioned case, when victims accessed the fake website of the Singapore International Monetary Exchange, they were given one of seven deposit addresses on the Ethereum blockchain. After the victim transferred the funds to these wallets, the fraudsters would transfer the funds to the broker’s shared deposit address.
From there, the funds were transferred to decentralized exchanges (DEX) where ETH was exchanged for stablecoins. From there, the funds were transferred to numerous other addresses and later transferred by converting cryptocurrency to fiat currency by depositing numerous OKX addresses. According to the US Secret Service, the scammers likely decided to use OKX to convert the stolen cryptocurrency into fiat currency because the exchange is based in Seychelles and is not available for use in the United States. Exchanges that make sense to operate outside the jurisdiction of the United States are less likely to respond to US search warrants and subpoenas, helping to cover up international fraudsters and money launderers.
In this case, the fraudsters continued this scam from approximately May to August 2022, with at least five identified victims whose funds were transferred, stolen and laundered through this series of transactions on the chain.
Pig Slaughter combines manipulative tactics with complex money laundering techniques, resulting in multiple layers of fraud. Analysis of chain activities provides quantitative insight into the mechanisms and magnitude of fraud related to pig slaughter. Armed with the knowledge of how they work and what to look out for, potential targets can better identify and avoid falling victim to such scams.
The importance of understanding pig slaughter fraud
CertiK’s mission to secure the Web3 world includes spreading awareness and information about known and identified fraud. By understanding the common tactics used by scammers, users can better detect and avoid these scams. Activities on the chain can be analyzed and evaluated to better understand the money laundering methods of these fraudsters.
If you suspect you have been contacted by a scammer, you can report it to the FBI using their Internet Crime Complaint Center. Users can further alert the community by reporting suspicious projects directly from the CertiK Security Leaderboard. Community alerts are shared in real time via @CertiKAlert.
Pig slaughter scams are one of the many ways unscrupulous actors try to separate unsuspecting investors from their money. For further reading, check out our analysis of the scams ahead that are becoming more prevalent on YouTube.
See the CertiK blog for the official release of this article
[ad_2]
Source link
