Love Lost in Cyberspace: Unpacking Crypto Romance Scams and Pig Butchering

Let's begin with what a "crypto romance scam" is:

Pig butchering in cryptocurrency is a type of investment scam in which fraudsters persuade victims to trust them with their financial assets under the guise of a beneficial business partnership. The scam includes gradually establishing confidence through conversation and minor gains, similar to feeding a pig, before defrauding the victim of huge amounts of cryptocurrency once they have been sufficiently 'fattened.' Unlike outright theft, pig butchering scams can play out over weeks or months, as scammers encourage victims to increase their payments before abruptly cutting off communication and disappearing with the funds.

Let's say a landscaper comes up to you and offers to make your yard look better. They start out small, maybe putting a few flowers in and doing regular upkeep. With each visit, they earn your trust. Over time, they get you to spend more money and time on more complicated landscaping jobs by promising that your outdoor space will look amazing afterward. You're excited and decide to put a lot of money into it, looking forward to the big show. However, the landscaper disappears as soon as you pay for the big job, leaving your yard unfinished and your wallet empty. Like when you butcher a pig, the first results and regular contact build trust, which makes you give a lot of money based on the promise of a huge payoff in the future that never comes.

Crypto romance scam vs. Pig butchering

Consider crypto pig butchering as a risky vineyard tour. They encourage you to invest in a vineyard, promising that your contributions will enhance the soil, foster a rare grape, and produce an exclusive, high-quality wine. Over time, you invest more money in the vineyard, pleased at the promise of a rich harvest and excellent wine. However, after your investment reaches its highest point, the vineyard owner disappears, and the promised wine never arrives.

A romantic scam, on the other hand, is similar to receiving a lovely but fake flower. The scammer, posing as a romantic interest, delivers this flower, promising that it will bloom if cared for with love and affection—and, on occasion, financial support for its preservation. You commit emotionally and financially to the goal of seeing this flower bloom, only to discover later that it never existed in the first place. Your emotional investment clouds your judgment, exacerbating the financial losses upon uncovering the truth.

Pig butchering data in 2020-2024

Between January 2020 and February 2024, criminal groups funneled approximately $75.3 billion in funds derived from pig butchering scams into cryptocurrency exchanges. Exchanges favored by US investors handled $15.2 billion of this amount.

The report by Griffin and Mei identified 4,728 cryptocurrency addresses linked to these scams. The most commonly reported ETH addresses were 3,256, with transactions totaling $5.8 billion. BTC followed with 770 addresses moving $373 million, and Tron with 702 addresses accounting for $389 million.

The researchers also tracked a staggering $1.172 trillion in total transaction volume related to pig butchering scams, with 84% of these transactions involving Tether. Tether's stability and lack of transparency make it the preferred cryptocurrency for scammers looking to withdraw from the DeFi system.

Additionally, Griffin and Mei reported over 104,000 small payments to victims in the initial 'fattening up' phase of the scams, primarily conducted through exchanges like Binance, Huobi, and OKX, predominantly utilizing Tether. These figures underscore the sophisticated organization of many pig-butchering scam operations.

The report also noted a significant shift in the geographical impact of these scams following China's crypto ban in late 2021. The ban led to a marked decrease in Chinese victims of romance scams, whereas the number of U.S. victims increased. In the United States alone, there were 70,000 romance scams reported in 2022, involving a total of $1.3 billion—a figure likely underestimated due to under-reporting. This trend illustrates how pig butchering scammers quickly adapt to global regulatory changes.

P.S. This data above is taken from the report of Crystal Intelligence B.V.

?

Here's a concise summary of the detailed explanation and data on "crypto romance scams" and "pig butchering":

Summary

Pig Butchering in Cryptocurrency: This investment scam involves fraudsters who build trust with their victims, similar to a landscaper who gradually earns a homeowner's confidence, only to disappear with their money. In crypto terms, scammers engage victims with small, convincing transactions to build trust. Once the victims gain confidence and investment, scammers vanish with substantial amounts of cryptocurrency.

Comparison to Romance Scams: While pig butchering focuses on financial deception through a faux business relationship, romance scams exploit emotional investment. Scammers mimic romantic interest, promising emotional returns and sometimes financial gains from nurturing a seemingly genuine relationship, only to defraud victims.

Impact and Scale (2020-2024): From January 2020 to February 2024, criminal groups transferred about $75.3 billion from pig butchering scams into crypto exchanges, with $15.2 billion processed through popular exchanges in the U.S. The scams involved 4,728 cryptocurrency addresses, with Ethereum being the most affected. The total transaction volume reached a staggering $1.172 trillion, predominantly in Tether, indicating the scale and organization behind these operations.

Adaptation to Regulations: The dynamics of these scams have shifted geographically following regulatory changes, such as China’s crypto ban in late 2021, which significantly reduced the number of Chinese victims but increased the number in the U.S.

Part-1: 13 years of Crypto Misconduct Exposed - click

Part-2: Rug Pulls in Crypto Bull Runs and Their Effect on Market Trust - click

I am a data detective! Every dataset has its secrets, and I love solving these data mysteries. I dig into the tiniest details, spot trends, anomalies, and connections that others might miss, ensuring you have the complete picture.

Linkedin | Medium