'Pig slaughter' online crypto investment scams deprive New Yorkers of RM49mil

A devious cryptocurrency scam called “pig slaughter,” which involves enticing investors to cash out their savings online in the hope of big returns, defrauded New Yorkers of US$10.5 million (RM49) over the past year, Brooklyn prosecutors said on Thursday. .83 million).

Brooklyn District Attorney Eric Gonzalez said the “pig-butcher” operations reach their targets on social media, through dating apps, text messages and online chat groups and establish relationships through a fake cryptocurrency website before offering them large returns. Let's try to make it.

When the targets attempt to withdraw their investments, they are blocked and the money disappears through the web of foreign electronic transfers. Operators often use boiler-room style call centers to achieve their goals involving people who are forced to work overseas.

“(The term refers to) when a pig is fattened up before it is slaughtered,” Gonzalez said. “It is a slow process of offloading the burden and also a slow process of earning the trust of people to attract them to invest. This is a confidence scam.”

He said more than US$4 million (RM18.9 million) had been lost in the past six months in Brooklyn alone. Nationally, the FBI has estimated that people have lost more than US$3 billion (RM14.2 billion) to the scam.

While the NYPD received 50 complaints in 2023, more than half of which were from Brooklyn residents, the actual number of people implicated in the scam is believed to be much higher, meaning the amount stolen is far larger, Gonzalez said. .

Gonzalez said it may be nearly impossible to get the money back and since the actors are abroad, it is equally difficult to make an arrest. He urged anyone who was a victim of fraud to report it to the NYPD or DA's Virtual Currency Unit.

The initiative began in March 2023 after a 51-year-old woman reported to the NYPD that she lost US$22,680 (RM107,661) in a scam.

Prosecutors said he had downloaded an app from a site called “coinformat.com” and made eight deposits. His profits quickly increased to US$387,495 (RM1.83mil), but when he tried to withdraw the initial investment, he was blocked from the chat group. The money disappeared.

The woman's investments were routed through various crypto addresses and ultimately deposited in a foreign cryptocurrency exchange. Prosecutors said it was probably cashed in by someone from China.

In the same operation, people in California, Pennsylvania, Texas and Illinois were defrauded, losing a total of US$366,665 (RM1.74mil). More victims came forward in that case and a network of 80 Internet domains were linked to coinformat.com. The total loss from the scam was more than US$1 million (RM4.74 million).

“Investment returns that seem too good to be true are almost always fake,” Gonzalez said. “I urge everyone to be very suspicious of anyone they have not met in person who offers an attractive investment opportunity in cryptocurrencies.”

Gonzalez said clever scammers often allow people to make small withdrawals, but block larger amounts.

“They will say you will be taxed, or you will be told you have to pay a fee, send us another US$35,000 (RM166,227),” he said. “Some people have actually borrowed more money to recover their initial investment.”

In a video played on Wednesday, a woman described how she met a man on the Bumble dating site who talked her into investing more than US$110,000 (RM522,225).

“I never got my money back,” she said. “I would tell people to listen to their gut.”

A second woman said the man who targeted her posed as a romantic interest and used information about her to manipulate her. It lost US$106,000 (RM503,235), she said. “My advice is don't get engaged,” he said in the video.

Foreign operations are generally beyond the reach of US law enforcement. Alona Katz, head of the DA's Virtual Crimes Unit, said the workers “are often people who have been coerced or trafficked and sometimes are literally chained to their desks.”

Targets are usually asked to visit a website and download an app to allow them to make a transaction. Even apps are poisoned with malware that can expose people's private communications and passwords, Katz said.

Katz said social media companies can do more to eliminate fake accounts and those originating from a single device.

“We have direct contact with some social media companies and the accounts are shut down within 24 hours,” Katz said. “Other companies are more resistant to taking our complaints.”

Gonzalez said that during the coinformat.com investigation, prosecutors shut down 21 Internet domains and took control of them, placing a screen on each that showed they had been seized by authorities.

“We're closing them down as we learn about them,” he said. “The bad news is that there are many more scammers out there.”

Gonzalez offered several tips for avoiding scams. Don't invest with strangers online, conduct background checks and check with the DA's office if contacted by a cryptocurrency firm.

Red flags include text messages from strangers claiming big money, you are suddenly added to a cryptocurrency chat group, or you are asked to download an app from an unknown company. – New York Daily News/Tribune News Service