Crypto activity linked to “pig butchering” romance scams is 85 times higher than it was in 2020, with revenue doubling from 2022 to 2023, according to a new report from Chainalysis.
Romance scams grew over this period even as the total value sent to scams fell, the report found. Ponzi schemes in particular fell in volume, which the report’s authors linked to the 2023 bear market and high-profile investigations deterring the public.
Pig butchering scams involve the use of social engineering to build an often romantic online relationship, before the victim is tricked into giving the scammer access to their funds. Several weeks after the relationship starts, the scammer explains they’re making a lot of money in crypto and suggests that the victim should try it out too. The scammer uses the victim’s lack of crypto knowledge to confuse and trick them into handing over access to their funds.
“It often involves tricking the victim into doing something a little bit more technical that the victim is not going to understand, like signing a transaction,” Adam Hart, Senior Investigator at Chainalysis, told Decrypt. “Over the course of weeks afterwards, they convince the victim to gradually put more money into that application, when the victim just has no idea the whole time that the application is essentially backdoored.”
The latest release of data from the Chainalysis 2024 Crypto Crime Report also found that romance scams have the worst financial impact on victims. The average payment size for romance scams was $4,593 in 2023, with NFT scams following behind at $3,095.
“Generally, it’s a lot easier for a victim to put a disproportionate size of their money into something when it is not some unknown third party investment service,” Hart explained. “But also, if [a scam] is targeted on individual people, the returns have to be a little bit higher for the scammer.”
People who fall victim to romance scams believe they are putting their money into something that a loved one is currently making money from, therefore they’re more willing to put bigger sums of money into the scam, according to the report’s authors.
Hart explained that the “violation of their trust” makes the non-financial impact particularly hard to bear for victims. “This is a person that they thought really cared about them, who oftentimes appears at a vulnerable moment in their lives, and then they end up financially ruined,” he said. “That’s got to be really rough to handle psychologically.”
For this reason, Hart said, many romance scams may go unreported due to the shame that accompanies them. That said, once a romance scam is reported it has an on-chain footprint that is unlike any other scam.
“Pig butchering scammers don’t put all the money into one big pot right away, they have addresses that might be specific to the victim, that are not yet reported, or blocked in any sort of wallet interface or on an exchange,” Hart explained. Other scams, such as ponzi schemes, often gather victims’ money in one wallet before the rug is pulled out from beneath them.
Who is behind pig butchering scams?
Romance scammers are often very organized groups that are vigilant in laundering funds and hiding their activity. However, it’s hard to not leave a trail behind when they are operating with such large amounts of money.
As a result, some romance scammers have been caught. In December 2023, an Interpol led operation saw 3,500 suspected cyber scammers arrested and $300 million related to pig butchering and other scams seized.
Reports have found that the people scamming pig butchering victims are often themselves the victims of human trafficking.
“Their workforce is composed of people who they trick into coming to a country like Thailand for a tech role—and then they basically kidnap them, bring them across the border into regions where they have corrupt relationships with the local officials, in areas like Myanmar,” Hart explained. They are often forced to work under the threat of reprisals, Hart added, meaning that, “oftentimes, the scammer on the other end of the phone who’s scamming the victim, they are themselves a victim.”
This type of operation has resulted in the Chinese police entering Myanmar to arrest two “powerful warlords” running scam centers—in turn, leading to China’s engagement with the civil war in the region.
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