The Department of Justice (DOJ) has seized six virtual currency accounts containing more than $112 million in funds stolen in cryptocurrency investment scams called “pig butchering.”
The seizure was authorized by judges in California, Arizona and Idaho on Monday to crack down on fraudulent currency accounts. Federal investigators confiscated over half of the stolen funds from Los Angeles to the tune of $66.4 million in numerous cryptocurrencies. As per the DOJ, the next step is to return the stolen cryptocurrency to the victims to create public awareness.
“These particularly vicious frauds — where scammers carefully cultivate relationships with their victims over time — have devastated families and cost individuals their life savings,” Assistant Attorney General Kenneth A. Polite said, as per CryptoSlate.
The FBI Phoenix Division has identified at least 69 victims who lost an estimated $33.9 million to these fraudulent investment platforms, according to California court documents.
The DOJ pointed out that such a scam is called “Sha Zhu Pan,” a Chinese phrase that means “pig butchering.” It has emerged as a new twist to the traditional online romance scam. Most of the victims range in age from 30 to 49.
Perpetrators behind these scams often develop an intimate relationship with their victims through an innocent text or WhatsApp message and convince them to invest in fraudulent cryptocurrency trading platforms. They make these investments appear so legitimate by developing forged portfolios with large returns on fake websites that the victims get convinced to invest in the cryptocurrency “opportunity.”
“The victims in pig butchering schemes are referred to as ‘pigs’ by the scammers because the scammers will use elaborate storylines to ‘fatten up’ victims into believing they are in a romantic or otherwise close personal relationship,” according to an affidavit accessed by CBS News.
“We all know that investment scams are not new, but the use of digital currency to commit fraud presents new challenges to victims and to law enforcement trying to recover lost funds — which likely total billions of dollars in the so-called ‘pig butchering’ schemes,” U.S. Attorney Martin Estrada told the outlet.
In one of the incidents mentioned in the court documents, the scam allegedly began on LinkedIn when a scammer using the name “Fei Kuang” convinced a victim to move her existing cryptocurrency to another exchange and invest more money into the new account.
The victim started realizing it was a scam when she attempted to withdraw her funds and the platform told her she had to pay a 20% fee in form of “taxes” if she wanted to get her money. She ended up losing about $2.5 million.
“Eventually, most victims are completely locked out of their accounts and lose all of their funds,” the court documents added.