The US Department of Justice has seized about $112 million worth of cryptocurrency from accounts linked to so-called pig-slaughter investment scams.
Judges in Arizona, California and Idaho have authorized seizure orders for six virtual currency accounts that prosecutors say were used to launder the proceeds of various frauds that cost victims millions of dollars after they were socially manipulated into investing their savings. on dubious digicash schemes.
"In this case, the FBI's Phoenix Division has identified at least 69 victims with an estimated loss of at least $33.9 million in connection with these various fraudulent investment platforms," โโaccording to the California court documents [PDF].
pig slaughter fraud is a new twist on the traditional online romance scams, so it usually starts with an innocent text or WhatsApp message. After the brand responds, the scammer works to develop a personal relationship with the victim, often by sending photos and the like, before convincing them to invest in a cryptocurrency "opportunity."
While the names and websites of investment companies may sound and look similar to those of legitimate companies, they are, of course, fake. And once the victim contributes funds, the money is sent to a scammer-controlled cryptocurrency wallet. When victims attempt to withdraw funds, they are sometimes required to pay "taxes," another attempt by scammers to steal even more money from victims.
"Eventually, most victims are completely locked out of their accounts and lose all of their funds," the court documents state.
Jenny, I have your number
In one case detailed in the court order, a woman named "Jenny" approached the victim, a retiree identified as "JZ" on Facebook. She claimed to be an expert in spot gold trading and after corresponding with JZ, she introduced him to a trading platform where her "friend of hers" was the CFO.
Jenny claimed to have $3 million in her account and sent screenshots to JZ showing huge profits from her fake trades. After convincing him to open an account with a minimum balance, "Jenny told JZ that she could have financial freedom if she deposited more funds," the court documents state.
By March 2022, JZ had deposited $1.1 million, and his "trading profits" increased his account to $2.4 million. However, after a series of "very aggressive trades", JZ lost it all. Jenny promised JZ that if she got $300,000, she would lend her $650,000 to make up for her loss.
JZ added the funds, plus another $100,000 from his retirement account that he had previously refused to touch, and he was back with $2.8 million, until he made a withdrawal request.
At this point, JZ's account was frozen and he was told he had to pay a $466,000 "verification fee" to unfreeze it. So he paid. Then he had to pay another $230,000 for "final verification."
After that, JZ tried to withdraw $50,000 from his account, but was told that due to "blockchain congestion", he couldn't withdraw the funds unless he deposited another $99,000 to become a "VIP member". of the trading platform. Once again, he deposited the additional money.
And then the scam stopped abruptly. JZ tried to contact the platform but no one responded. Jenny blocked JZ from her social media accounts and never spoke to him again.
JZ lost his entire investment: about $2.36 million.
Court documents detail the story of each victim and trace the funds in the various accounts that are subject to the seizure order, though the seizure order, including the wallet addresses and diagrams that trace the funds, is heavily redacted.
"Now that we have seized this virtual currency, we will seek to promptly return it to the victims," โโAssistant United States Attorney General Kenneth Polite, Jr. said in a statement. statement.
In 2022, investment fraud caused the highest losses of any scam reported by the public to the FBI's Internet Crime Complaint Center, totaling $3.31 billion, with pig slaughter and other cryptocurrency fraud accounting for most of these. [PDF].
And it's a growing industry; Cryptocurrency scams increased 183% from 2021 to 2022, with reported losses of $2.57 billion last year. ยฎ
