"Pig Slaughter": How online scammers rake in billions through crypto scams.

With the advancement of internet technologies and artificial intelligence, the online fraud industry is also evolving: various estimates suggest that the global income of scammers worldwide already reaches $500 billion annually. This amount is comparable to the earnings of drug traffickers.

During the pandemic, when millions of people around the world were confined to their homes, a new fraudulent scheme emerged in the cryptocurrency market - pig-butchering.

New "friends" gain the trust of the victim ("pig"), then, having "fattened" her, they offer lucrative investment opportunities, and subsequently begin to drain her crypto accounts. The "pig is slaughtered" when all the money has been siphoned off, and the "friends" vanish. This scheme may seem trivial, yet people worldwide lose millions of dollars because of it.

How did an experienced banker from the USA get scammed out of $50 million? Why are Myanmar and Cambodia the centers of "pig-butchering"? And how can one avoid becoming a victim of fraud?

What is pig-butchering?

Pig-butchering is a type of online fraud that is related, on one hand, to investments (most often in cryptocurrencies), and on the other hand, to romantic relationships online.

Why is it called that? Similar to how long pigs are raised before slaughter, in pig-butchering, scammers take their time to build trust with the victim - from several weeks to several months. This type of fraud often targets lonely elderly individuals.

According to the U.S. Institute of Peace (USIP), the first recorded instances of such fraud were in China in 2018, and the pandemic stimulated its "explosive" growth.

How does the scheme work? Scammers initiate "cold contact" with potential victims via social media, dating apps, or phone calls. They play the long game, working to establish trust. This can manifest as friendship or a budding romance.

Fraudsters typically have a fake online profile with an attractive avatar (usually stolen from someone else or AI-generated) and photos that portray a lavish lifestyle.

They disguise themselves as appealing singles or successful investors who are trusted. One of the most common tactics is to "spread and wait": sending thousands of generic text messages to a vast number of accounts through social media, SMS, and dating apps, waiting for a potential victim to "bite."

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Once the user responds to the first message, the scammer carefully chooses words to gain trust. Communication may last for weeks or months.

After gaining trust, the scammer "accidentally" mentions a "profitable investment opportunity," encouraging the victim to "start small." The interested client then transfers funds to crypto accounts controlled by the scammers.

Clients are allowed to withdraw small amounts of their initial "investments" to maintain trust, but as soon as the scammers obtain large sums or the "pig" figures out the scheme, they disappear.

Scammers are well-prepared for their work: they are given detailed instructions on how to deceive victims. This includes books on the basics of the crypto market and algorithms on how to prevent the deletion of fake accounts on social media.

Among the instructions are tips on how to engage the victim in discussions on various topics: football, music, books, or gardening. Additionally, they are taught how to use seemingly innocent questions to gauge the potential client's financial status.

Furthermore, scammers are instructed on how to develop romantic relationships with the victim in dating apps. "Compliments, goodnight wishes when the victim goes to bed - these and other techniques are effective psychological weapons," - The Economist writes.

Prisoner scammers in Southeast Asia

Often, the scammers pretending to be friends on social media are also victims, exploited by criminal syndicates. According to UN estimates, in 2023 at least 220,000 people were forced to work in "scam centers" in Myanmar and Cambodia.

In total, people from over 70 countries have been sold to fraudulent "farms" and "parks" in Southeast Asia. Many of them are university graduates with foreign language skills from poor countries, lured into slavery with promises of well-paying jobs in call centers.

These workers are kept on "farms" under horrific conditions. "If you don't find a victim, you get electrocuted. There have been cases where women were sold into sexual slavery afterward. To escape, prisoners are forced to ask relatives to pay huge ransoms," - recounted Jalil from Uganda, who managed to escape from slavery in Myanmar. He fell into the trap by responding to a fake ad for a well-paying job in marketing.

Such "parks" thrive primarily in the poorest countries of Southeast Asia: Myanmar, where lawlessness prevails amid an ongoing civil war, and in corrupt Cambodia, where authorities are paid to turn a blind eye to it.

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"Parks" and "farms" are secured with high fences topped with barbed wire, surveillance cameras, and armed guards - all to prevent the scammer prisoners from escaping. One such "park" can hold up to a thousand enslaved scammers.

The number of criminal networks is increasing beyond Southeast Asia: in Africa, Europe, the Middle East, and South America. Last year, one of them was discovered on the Isle of Man off the coast of the UK.

Some fraudulent operations are conducted from hotels: criminals rent several floors, install metal gates, and hire armed security, while hotel owners turn a blind eye. According to the United States Institute of Peace (USIP), around 500,000 people are directly working as scammers.

In the scammer industry, there are no physical limitations - only access to the Internet is required, thus the barriers to entry are low, while profits are high. This allows criminals to attract power to their "farms," especially in impoverished Asian countries.

"There are no law enforcement agencies there; such centers effectively are the law," - explained Chris Urban, who worked for 25 years in the U.S. Drug Enforcement Administration.

Analysts state that online fraud has become the backbone of the economy in Cambodia, Myanmar, and Laos. They estimate that this industry generates over $12.5 billion annually in Cambodia, equivalent to half of the country's official GDP.

Thus, the official economy there - construction, hospitality, etc. - also depends on fraud. "The level of corruption among government entities in countries like Cambodia exceeds what we saw in the drug states of Latin America in the 1990s," - acknowledged organized crime expert in Southeast Asia Jacob Sims.

She initially managed to escape with the help of corrupt officials, but over time, Go was found in Indonesia and extradited to the Philippines, where charges of money laundering, human trafficking, and corruption were filed against her.

Filipinos fear that other local "fraud bosses" will enter politics, like Go. Moreover, online fraud is considered a threat to national security.

How a bank in the USA went bankrupt due to "pig-butchering"

According to estimates by Chinese organized crime expert Martin Purbrick, the annual income from online fraud worldwide already exceeds $500 billion. This places it alongside illegal drug trafficking as one of the largest "black" sectors in the world.

According to the FBI