December 22nd, 2022
Crypto is a fast-moving space with new platforms and coins seeming to arise every day. As a result, it can be difficult to keep up with Web3 and know which projects are trusted and which are not.
As a result, the crypto space is rife with scams and fraud. While rug pulls are the most well-known threat, they are far from the only ones.
Pig butchering is a scam that originated in traditional finance but works just as well in crypto. After spending time building rapport and trust with the victim, a scammer will trick them into a series of unwise investments that place money in the attacker’s pocket.
Pig butchering scams are social engineering attacks in which the scammer works to build trust with the intended target. Once they have achieved rapport, the scammer tricks the victim into investing in a scam that steals their money.
Pig butchering attackers start by building a profile that they use to connect with potential targets. These social media profiles often include attractive – and often stolen – photos of the alleged profile owner.
The scam begins with the attacker reaching out to the intended victim, often pretending to have done so by mistake. This could include a message to a “wrong number” or the attacker wondering why they have the victim’s information in their contacts.
Once they have a connection, the attacker will work on building rapport. Instead of moving directly to providing investment advice, the scammer will engage in friendly chats with their target. The goal of these conversations is to build a connection and to collect information about the target that could be used later in the scam. The scammer will also take this opportunity to share details about themselves that make them sound like they have similar interests and experiences as the target, taking advantage of the fact that people are more likely to like and trust people who are like them.
Eventually, the attacker will turn the topic of conversation to investing. They’ll mention that they have been very successful at it and may even share details of their success. The end goal is for the scammer to convince the target to invest in the scammer’s brokerage or crypto trading platform, giving them an opportunity to earn the same rewards. However, in reality, the platform is fake and the money invested by the victim goes directly into the attacker’s account.
However, this first investment is typically only the beginning of the scam. First, the scammer will likely try to build trust by allowing a withdrawal or two, which a victim wouldn’t expect from a scam. Then, the attacker will use a variety of means to trick the victim into putting more money in. At first, this typically involves demonstrating huge profits, making additional investment enticing.
However, after a while, these rewards will turn into losses, or the platform will become inaccessible. At this point, the attacker will use information shared by the victim for psychological manipulation or claim that the payment of additional taxes and fees is necessary to enable withdrawals and release funds.
Eventually, the victim will become suspicious, but, by this point, it’s too late. While the scammer may have allowed a withdrawal at first to build trust, every other deposit is irreversible. When confronted, the attacker may end the scheme, often taunting and mocking the victim before they and their alleged brokerage disappear.
Pig butchering scams can be sophisticated attacks because scammers are willing to put in significant time, effort, and resources for big rewards.
Some ways that you can spot a scam and protect yourselves against pig butchering scams include the following:
While pig butchering is an increasingly common scam in the crypto space, it is far from the only threat that Web3 investors face. To learn more about what to look for and what to avoid in crypto projects, check out our blog article on the most common types of crypto scams.