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What they are and how to investigate them
Cryptocurrency is undeniably a polarizing topic. For as many supporters who champion crypto as the future of finance, you will find an equal number of naysayers. Since the first transaction took place on the Bitcoin blockchain in 2009, cryptocurrency has risen from a niche interest for a select few to a politicized furor on everybody’s lips. While there is certainly no shortage of opinions on cryptocurrency (and I am certain you personally may harbor your own), law enforcement worldwide is constantly fielding complaints of crimes involving cryptocurrency. One complaint that remains constant is investment fraud, colloquially dubbed “pig butchering,” or in layman’s terms, fake cryptocurrency investment sites. There are many who feel these types of cases are beyond what local and state police departments can investigate. I am here to tell you that is not true. As I have previously written in other articles for American Police Beat, it is imperative that police departments nationwide be vigilant of these cases. Regardless of how you may feel about these cases, they aren’t going to go away, and it will certainly continue to get worse before it gets better.
There are many who feel these types of cases are beyond what local and state police departments can investigate. I am here to tell you that is not true.
What exactly is “pig butchering”? According to the FBI, the term “refers to a time-tested, heavily scripted, and contact intensive process to fatten up the prey before slaughter,” and “pig-butchering” cryptocurrency scams combine elements of “romance scam[s] with an investment spin.” The scams originated in Southeast Asia and are spreading across the world. In early 2023, the Michigan Department of Attorney General issued a consumer alert that described the scam concisely: “The new friend slowly convinces the target to invest in cryptocurrency and refers them to a bogus website or app that looks authentic but is controlled by the scammer. The victims are encouraged to invest small amounts in the beginning and the scammer will make sure to post a modest gain on the investment. They may even allow the victim to withdraw money once or twice to convince them the process is legitimate” (see more at tinyurl.com/4ck3wrks).
Victims are often recruited via social media platforms or dating apps/sites. “Pig-butchering” scams are closely related to “Nigerian 419” advance-fee fraud scams in that victims are drawn to the purported “exclusive” investment platforms and encouraged to invest their crypto from the Tier 1 legitimate exchanges like Coinbase or Binance to a “high-yield” platform. While victims often believe their money is being securely invested and “safe,” the bad actors behind the sites are simply sending the victims’ funds elsewhere without their knowledge. Victims do not become aware of this until they attempt to retrieve their funds. The underlying programming/script responsible for the theft of victims’ funds often operates as its own criminal enterprise, used in various cryptocurrency-related crimes, including “pig butchering.”
A commonality among most of the “pig-butchering” sites is their appeal based on unrealistic returns on investments. The feeling of exclusivity and grandiose promises attract the crypto layperson. The sites may also bolster their attractiveness by using dog-whistle terms like “AI” or “quantum computing,” things that a tentative “investor” may have heard before but doesn’t fully comprehend. Yet, however attractive these sites may present themselves as being, what goes on “behind the scenes” with their victims’ cryptocurrency is rather primitive and simple: crypto goes in and the suspect(s) takes the crypto out. It’s no different than what we know as a Ponzi scheme — a timeless fraud now being carried out in a new digital landscape.
While many sites may promote themselves as being in different countries like Australia (GCCKCFX), Finland (Sycadar [now offline]) and the United Kingdom (McHarvey Capital [now offline]), the actors behind the sites and in control of the victims’ cryptocurrency funds are commonly in India, Nigeria or China. A commonality among the sites is that cryptocurrency cannot be purchased on the sites themselves, rather it is purchased at an exchange, CryptoATM, etc., and then transferred into the sites. This is because the “pig-butchering” sites do not have legitimate holdings or liquidity; they are simply conduits for taking victims’ funds and transferring them elsewhere, where ultimately the cryptocurrency is sold for fiat currency (like U.S. dollars).
Many state and local police departments decry that they cannot investigate cases involving cryptocurrency in general. Or perhaps have a lack of empathy or compassion for the victims who “should’ve known better” than to fall for “too good to be true” promises. Or perhaps the sentiment that because your department can’t afford licenses to blockchain analytic platforms, there is “no way” to handle these types of cases. All of the excuses and logic mentioned above are incorrect. For example, you can take a detailed report from the victim, to include the website domains as well as any possible cryptocurrency addresses, and enter a complaint on behalf of the victim to IC3.gov or the FTC’s Consumer Sentinel (tinyurl.com/3twy64kz). For investigators who have searchable access, these types of reports can help correlate cases and discover victims across the U.S. and the world. Another step I highly recommend is archiving the site as it exists via https://archive.today. The reason? Most of these sites go offline rather quickly. It will preserve the site to be viewed in perpetuity. (For example, you can view the now-defunct “pig-butchering” site Sycadar via my archiving at https://archive.ph/Qz3zX.) Even investigating the sites themselves, such as finding out the domain name service they were registered through and what their hosting IP address is, can all be extremely beneficial in possibly identifying the actors behind the sites without ever touching cryptocurrency analytics. However, cryptocurrency/blockchain analytics can let you know where the victims’ funds are being “cashed out.”
Maybe you harbor your own animus toward cryptocurrency since you lost your hard-earned money on a dog-themed token that Elon Musk tweeted about. That’s not what we have discussed in this article! The volatility of cryptocurrency has created the polarized viewpoints on the topic. “Pig butchering,” however, is simply fraud and theft involving cryptocurrency. If somebody were to walk into your police department and say that somebody robbed them of $100,000 cash on the street, there would be an all-hands-on-deck, full-scale investigation. And yet, when a victim walks into your department and says they lost $100,000 worth of cryptocurrency on a fake cryptocurrency exchange, are you going to say, “We don’t handle those cases”? Is your response, “What do you expect us to do?”
It should never be that kind of response. These types of cases are only going to get worse. There is much that state and local law enforcement can do to help put an end to “pig butchering.”
Keven Hendricks
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