Binance Warns of Escalating Pig Butchering Scams – What's Going On?
Binance warned that the number of reported pig butchering scam cases doubled over the past year.
Scammers are drawn to whatever is gaining popularity: "Wherever there’s an opportunity to promise high returns with minimal risks, a pig butchering scam can take place."
Blockchain and digital assets have seen increased adoption, higher demand, and recognition, Binance said, drawing attention from all sorts of scammers.
Per the exchange,
"Pig butchering scams have experienced a worrying upsurge in the crypto space, fueled by the growing interest in digital-asset investments. This rise is part of an overall increase in investment scams across all finance-related industries."
Losses from investment fraud jumped 127% from $1.45 billion in 2021 to $3.31 billion in 2022, a "significant" portion of which involved crypto.
Crypto investment fraud cases went up 183%, from $907 million in 2021 to $2.57 billion in 2022, Binance wrote.
The exchange's internal data and research recorded "a roughly 100% increase" in the number of reported pig butchering scams from 2022 to 2023 - a figure that will likely rise by the year's end.
"This surge in crypto-related scams can be connected to the influx of inexperienced investors entering the market, with scammers seizing the opportunity to exploit their lack of knowledge about a new asset class."
Blockchain, however, makes it easier to track and fight these scams, as transactions are public and traceable. As such, it is "a powerful tool" for gathering evidence and taking action against scammers.
Anyone Can Fall Victim
'Pig butchering' consists of scammers 'fattening up' their victims - commonly inexperienced investors, before 'butchering' them.
"It is important to remember, however, that anyone can become a fraud victim, including more experienced investors and knowledgeable crypto users."
First, the victims are promised high returns should they invest on a fraudulent platform and are shown initial 'profits' once they do. Over time, the fraudsters gain the victim's trust, taking more money.
Then, the scammers take as much as possible and whatever money the victim has left - before disappearing.
These actors' tactics have been used for decades in various financial cons. Common types include social engineering scams, romance scams, Ponzi schemes, exit schemes, and pump-and-dump schemes.
There are some tips people can follow to distinguish a legitimate investment opportunity from a scam, such as conducting thorough research, verifying credibility, investing through official channels, not rushing into decisions, and being skeptical of unsolicited offers.
Meanwhile, in April, Binance supported the US Federal Bureau of Investigation (FBI) and Department of Justice (DOJ) in a crypto-linked pig butchering case where $112 million in funds were seized.
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