I have been warning you about romance scams for many years.  More recently I have been warning you about cryptocurrency scams since 2017.  In the last few years a new scam combining the romance scam and cryptocurrency scams has surfaced.

Romance scams generally follow a familiar pattern with the scammers  establishing relationships with people, generally women, online through various legitimate dating websites and social media using fake names, locations and images.  In the last few years the FBI identified a trend in romance scams in which the scammer tells his victim that he or she has inside knowledge about cryptocurrency investing and directs the victim to a phony website that purports to be a legitimate cryptocurrency trading site.  Not long after “investing” in the cryptocurrencies provided, the victim soon finds that there is no investment and that she or he has lost all of the invested money.  This scam originated in China in 2019 and is called sha zhu pan or pig butchering in English.  The name is derived from the practice of luring in victims, “fattening them up” by convincing them to continually “invest” more money and then stealing all of the money.

The scammers initially contact their victims on dating or social media apps and pretend to develop a close relationship.  After a while the scammer informs the targeted victim that he or she is making a lot of money investing in cryptocurrencies and suggests the victim download and use a cryptocurrency app used by the scammer.  Generally, the victims are lured into investing more and more money by what appears to be both dramatic increases in the value of their account and their ability to withdraw some of their profits.  However, once the victim has been persuaded to invest larger and larger sums of money, the scammers steal the money and the victim is left with nothing.

You might be surprised to learn that typically the victims of this scam are highly educated people.  Unfortunately, they also are targeted because they may have also recently gone through a divorce or some other personal difficulty.  While the victims are people of all ages, most victims are anywhere from their mid-30s to their early fifties with the average loss per victim averaging $121.926 with one victim, according to the IRS losing two million dollars to the scammers.

Recently New York Attorney General Letitia James issued a warning about the dangers of pig butchering in which she mentions how many pig butchering scammers request their victims to communicate with them exclusively on WeChat, WhatsApp or other encrypted platforms to make it more difficult for law enforcement to trace who they are.

TIPS

It is important to remember that you should never  invest in something that you do not completely understand.  This was a mistake that many of Bernie Madoff’s victims made. Cryptocurrency scams quite often involve complicated language and investment terms that is purposefully unclear in an effort to confuse potential investors from understanding the real facts. You also may want to check out the SEC’s investor education website at www.investor.gov.  Scammers can be very convincing and it may sound like there is a great opportunity for someone to make some money, but you must be careful that the person making money is not the scam artist taking yours.

Also, the apps used in the pig butchering scam may appear to be legitimate, but they are not found on official app platforms such as Google Play or the Apple App Store.  Do your homework before investing in cryptocurrencies and only do business with well established cryptocurrency exchanges.  Never invest merely because of the recommendation of someone you may have met online.

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