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CertiK’s latest blog details the depths of pig slaughter in the cryptocurrency industry.

An increasingly common form of cryptocurrency scam is the euphemistically called “pig slaughter” scheme. Pig slaughter involves scammers posing as successful traders to then lure unsuspecting victims into investing with them for incredible profits. Scammers first take the time to build their victims’ trust on social media, text messages, or dating apps, before promising them how to multiply their life savings with cryptocurrency, forex trading, or other financial markets. After the scammer “feeds” his victims (the pigs) with promises of big profits, he slaughters them, cutting off communication and running off with the money the unsuspecting targets had invested.

Scammers adopt a variety of disguises designed to build trust with their targets, including posing as mutual friends or former colleagues of a victim to start a seemingly legitimate conversation. Pig slaughter scammers will provide fake websites and apps that allow victims to track their investments. These sites give the impression that the initial investment is growing rapidly. However, when victims try to collect their winnings, scammers delay by asking for more information or informing “investors” that they must pay income tax or some other fee in order to withdraw. The luckiest victims will leave here, but those who take this bait simply lose even more money. Ultimately, the victims are unable to recover the money they had invested and the scammers cut off contact with the victims, completing the scam.

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Font: World organization against scams

The rise of pig slaughter scams

According to the FBIpig slaughter scams caused losses of more than $429 million in 2021. More than 75% of victims lost at least half of their net worth and approximately one-third went into debt as a result of pig slaughter scams.

the World organization against scams reported that 67% of the victims of hog slaughter scams are women between the ages of 25 and 40, who lost an average of US$121,926. Similar studies carried out in Australia Y Porcelain reflected this bias, with approximately 69% of reported victims being women.

Perhaps surprisingly, 32% of pig slaughter victims have a graduate degree. This is a large overrepresentation, since only 13.1% of the US population have an advanced degree.

The Global Anti-Scam Organization also found that victims of pig slaughter schemes tend to be unfamiliar with how regulated intermediaries work, were attacked at a vulnerable time in their lives, and had substantial savings to invest.

How to spot and avoid pig slaughter schemes

the The FBI has published four tips to avoid falling victim to pig slaughter and similar scams.

Verify Investment Opportunity Claims

Conduct comprehensive due diligence on any and all investment opportunity claims. Pig slaughter scammers often approach their victims for unrelated purposes to build trust and only present the fraudulent investment prospects later once they have established a relationship with the victims. Be very careful when strangers or long-lost contacts approach you with investment opportunities.

Double check domain names

Many pig slaughter scammers create domains that mimic the websites of legitimate financial institutions. Be sure to always check domain names, especially for cryptocurrency exchanges, to catch the subtle changes that characterize fraudulent websites.

Do not download suspicious software or applications

Please stop and evaluate trading apps or software before downloading anything. To confirm the validity of an app, pay attention to the details provided in the app stores, such as the developer, the seller, and the description of the app. If the developer’s name is unknown, contains misspellings, or closely resembles a well-known brand or organization, it could be a fraudulent app. Most app stores include links to the developer’s website, so always check if these links point to an authentic site before proceeding. Be careful if unknown websites ask you to download applications or software.

If an investment opportunity sounds too good, it probably is.

The golden rule of investment due diligence applies here. If an investment opportunity sounds too good to be true, it probably is. Pig slaughter scams often promise guaranteed profits, which should always be considered a major red flag.

Police action against pig slaughter schemes

On October 13, 2022, the US Department of Justice unsealed an indictment against eleven New York and New Jersey residents for allegedly defrauding victims of approximately $18 million in hog slaughter schemes. The defendants were charged with money laundering conspiracy, wire fraud conspiracy, bank fraud conspiracy, passport fraud conspiracy, and aggravated identity theft, among other charges, for their involvement in these schemes. This indictment marks the largest ever indictment of individuals committing and defrauding victims through hog slaughter schemes.

On November 21, 2022, the US Attorney’s Office for the Eastern District of Virginia announced the seizure of seven domains used in hog slaughter schemes. All of these domains were counterfeit versions of the Singapore International Monetary Exchange website.

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lost victims more than $10 million in this particular case of pig slaughter.

Chain investigation of pig slaughter

Not all pig slaughter scams use cryptocurrency. This can make it difficult to track the flow of funds through the often opaque world of banking. However, for those who do, we can easily use blockchain analytics to track stolen funds and identify scammers’ wallets.

In the aforementioned case, once the victims accessed a spoofed Singapore International Monetary Exchange website, they were provided with one of seven deposit addresses on the Ethereum blockchain. After the victim transferred funds to these wallets, the scammers would transfer the funds to a common intermediary deposit address.

From there, the funds were transferred to decentralized exchanges (DEXs) where ETH was exchanged for stablecoins. From there, the funds were transferred to many other addresses and then siphoned off by converting the cryptocurrency to fiat by depositing numerous OKX addresses. According to the US Secret Service, the scammers likely chose to use OKX to convert the stolen cryptocurrency into fiat currency, as the exchange is based in the Seychelles and is not available for use in the United States. Exchanges that strive to operate outside of United States jurisdiction are less likely to respond to United States search warrants and subpoenas, helping to provide cover for international money launderers and scammers.

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In this case, the scammers continued this scam from approximately May through August 2022, with at least five identified victims whose funds were transferred, stolen, and laundered through this series of on-chain transactions.

Pig slaughter combines manipulation tactics with complex money laundering techniques, resulting in multiple layers of fraud. Chain activity analysis provides quantifiable information about the mechanisms and scale of hog slaughter scams. Armed with the knowledge of how they work and what to look for, potential targets can better identify and avoid falling victim to these types of scams.

The importance of understanding pig slaughter scams

CertiK’s mission to protect the Web3 world includes spreading awareness and information about known and identified scams. By understanding the common tactics used by scammers, users can better spot and avoid these scams. On-chain activity can be analyzed and evaluated to better understand the money laundering methods of these scammers.

If you suspect a scammer is contacting you, you can report it to the FBI using your Internet Crime Complaint Center. Users can also warn the community by reporting suspicious projects directly from the CertiK Safety Rating. Community alerts are shared in real time via @CertiKAlert.

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Pig slaughter scams are one of the many ways unscrupulous actors seek to separate unsuspecting investors from their money. To read more, check out our front running scam analysiswhich are becoming more frequent on YouTube.

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