'Pig butchering' crypto scams swindle billions of dollars from Americans per year
RALEIGH, N.C. (WTVD) -- The lure of making huge profits in the cryptocurrency realm continues to trick people out of their life savings.
"Cryptocurrency has become something of a gold rush where people feel this sense that they do not want to miss out," said Michael Easley, US Attorney for the Eastern District of North Carolina.
His office investigates crimes involving cryptocurrency and he said many victims are falling for what's known as a pig butchering scam.
"These pig butchering fraudsters will present to these victims in the very same way every time an incredibly beautiful or handsome person, wildly wealthy, who has a cryptocurrency trading side hustle, and they want you to know all about it, and they're going to tell you that they want to get you in on the action, too. That all you have to do is make an account, download this app put a little money in, and see what happens. They may even make it so that money grows. They may add money to the account to make it feel like you've profited just to fatten up the pig and when the pig gets hungry, you go back for more. They put more money in, they put more money in, and before you know it, somebody's entire life savings or retirement account."
Over the last two years, ABC11 has heard from several victims of cryptocurrency scams. Jim Wilkerson of Cary lost more than $750,000 after he thought he found a great investment opportunity.
This whole thing started when Wilkerson was contacted on LinkedIn about an investment opportunity.
"This person said, well, you know, those gold futures -- and I did some reading up on it -- are risky, but it's a very high return. So, OK, I'll take a shot, it can't hurt," he recalled. Wilkerson said he was seeing returns of 21% to 24% and he was able to pull some of his money out which made it appear legitimate.
He kept investing and when he tried to pull more of his earnings out that's when he had problems and eventually all of his money disappeared and left him with a zero balance.
"Total was approximately $790,000. That was my money out of my pocket. The combination of savings, the stock's sales, the 401K that I took out of my 401K to invest in it," Wilkerson said.
Pamela Magnum of Durham also lost money in an investment scam. She learned about it through social media thinking it would be a way to make extra cash.
"The money went from like $3,500 and then it was like at $30,000, then it went to $54,000."
Seeing what seemed to be big returns as high as $159,000, Mangum continued to invest more and more of her money. It all came to a halt when she tried to get her supposed profits. All communication stopped, and there was no sign of her ever getting her investment of $70,000 back.
"I get very emotional because I'm a smart lady and I just fell for this. I thought it was easy money," Mangum said.
Easley said as scammers continue to become more sophisticated and use new tools like artificial intelligence to target people in cryptocurrency scams, awareness is key to fighting the scam.
"These are made to look or sound exactly like a real crypto trading platform, but they're completely fake and so the money that you see is representative of the account that you believe you've wired your cryptocurrency into just isn't there at all. It's a complete fabrication."
SEE ALSO | Woman loses nearly $1 million life savings in 'pig butchering' scam
Large profits drive crypto scams
The crypto investment pig butchering scams account for billions of dollars in fraud per year.
"It is a very complex, very sophisticated, multifaceted operation that is very hard to disrupt midstream and that's why these amounts lost tend to be so high," Easley said.
According to the FBI, crypto investment scam losses rose from $3 billion in 2022 to $4.5 billion in 2023. For the first six months of 2024, the agency received more than 18,000 complaints reporting crypto-investment scams, with losses of more than $1.9 billion.
Easley's office along with the FBI, just seized nearly $5 million worth of cryptocurrency allegedly stolen from victims in a so-called "pig butchering" crypto scam.
Easley said one obstacle with stopping this scam is that the criminals carrying them out often aren't in the United States.
"It takes an international approach to how they'll do fraud and by being set up in countries that do not have extradition arrangements with the United States. If you commit a fraud from Myanmar, in a warehouse full of people working these scams every single day, it's going to be incredibly difficult for the United States of America to put somebody in prison in handcuffs and lay hands on."
The best way to avoid the scam is not engaging with the scammers to begin with, but if you do fall victim to the scam, reporting it right away.
"Job one -- very quickly after a fraud comes to our attention -- is laying hands on that money, seizing the accounts, and trying to claw it back to get it back to the victims. That victim-centric approach is what's new about our strategy," Easley said. "Our strategy has shifted from just focusing on getting people in handcuffs to try and see if I can get the money back in the hands and in the pocket of these victims," Easley said.
More than just one victim
An ABC News investigation found that the people luring victims into investing in cryptocurrency scams may also be victims themselves.
In parts of Southeast Asia, Africa and South America, at least 200,000 people are reported to be trafficked and forced to work as scammers. A report by the United Nations found that "dormitory style bedrooms were constructed in complexes; scammer training manuals were created; enforcers were hired to control trafficking victims; and the mass recruitment of trafficking victims began." The scam compounds are run by organized criminal groups, the UN report said.
ABC News spoke to Sara, a 36-year-old woman who does not want to use her real name. Sara, who lives in South Africa, claims she was trapped in a scam compound in Myanmar for 9 months after applying to a customer service job based in Thailand.
Sara told ABC News she was interviewed multiple times for the job, and a round-trip plane ticket was even purchased for her to fly to Thailand by what she believed was a legitimate company.
"It seemed legit because every time I called them, they would pick up," Sara said. But when Sara arrived in Thailand, she said she was driven in a car for hours and then eventually placed in a boat with gunmen.
"It was so scary, because now if this is a job, why do we have gunmen," Sara said. Sara told ABC News she was taken across the border to Myanmar and placed in a scam compound where she was given scripts and several phones to message people.
"I was a prisoner, yes. I realized from that moment, that OK, I was being kidnapped."
Sara was able to leave the compound when a fellow victim who had escaped months before helped her pay for her ransom.
