Feng Chen and his wife Tianqiong Xu were living in Frisco Texas and operating a pig butchering cryptocurrency scam from 2021 through 2024 according to the FBI.  The FBI had been investigating the couple since 2021, but by the time they got an indictment for wire fraud and money laundering in June of 2024, they had both fled to China where they are both citizens.  Now, the FBI is attempting to seize mroe than 6 million dollars worth of cryptocurrency held in four electronic wallets. This  pig butchering scam originated in China in 2019 and is called sha zhu pan which translares to 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.

In this case, according to the FBI Chen and Xu preyed upon people of Chinese heritage in the United States who they met through Chinese language investing chat rooms.  After building trust, they would encourage their victims to invest in fraudulent cryptocurrencies. They would tell their targeted victims that they were making a lot of money investing in cryptocurrencies and urge their victims to download and use a cryptocurrency app used by them.  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, the documentation of their account and its increase in value is all fake.  Ultimately, the victims are left with nothing.  According to the FBI, Chen and Xu stole approximately 9.5 million dollars from 120 victims.

This scam is also a  good example of what is called affinity fraud where people put undeserved trust in someone offering an investment opportunity because that person is “someone like me.”  Affinity fraud works because people trust other people who may share a common bond, such as family, religion or, in this case, ethnicity.   The list goes on and on.  Scammers take advantage of every connection they can make with their victims to gain their trust and then steal their money.  Trust me, you can’t trust anyone.  Never put your trust in someone in regard to an investment merely because you share some common identity.

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.

As for trading sites, you should always investigate any site you are considering before investing.  See if the platform is registered with the SEC and licensed.  You can also look for reviews of the site on cryptocurrency watchdog sites such as CoinMarketCap or CoinGecko.  Also, check with  the domain registry site https://www.whois.com/ to see who set up the particular site and how long it has been in existence.

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