It’s a lucrative scam with victims in multiple states, authorities warn.
Prosecutors in Brooklyn seized nearly two dozen web domains associated with a scheme known as “pig butchering” — striking an online conversation with unsuspecting victims, gaining their trust and then steering them into bogus cryptocurrency investments.
Brooklyn-based victims were scammed out of at least $5 million after they were convinced to invest in cryptocurrency by someone they met through a random text message, a dating site or through a WhatsApp group, according to the Brooklyn District Attorney’s Office.
The investments show tremendous returns but when the victims try to withdraw substantial sums they are blocked from their account and lose their entire investment, authorities say.
The Brooklyn DA’s office says it seized coinformat.com and 20 other active associated domains in connection with the investigation into the scheme. Three virtual servers hosting those sites have also been seized.
Authorities warn it’s a lucrative and growing scam with victims in multiple states. The masterminds rely on human trafficking victims to help facilitate the scams at compounds in Southeast Asia, prosecutors say.
“Pig butchering is a growing type of scam that defrauds residents of Brooklyn and the entire country out of billions of dollars every year,” Brooklyn District Attorney Eric Gonzalez said. “My office’s strategy is to disrupt these schemes by seizing and shutting down their online infrastructure, and to educate the public about ways to avoid becoming a victim. Awareness and education are the first and best lines of defense against these prolific scams. Investment returns that seem too good to be true are almost always just that – fake.”
The U.S. Justice Department last year announced it had seized virtual currency worth an estimated $112 million linked to pig butchering scams.
“The victims in Pig Butchering schemes are referred to as ‘pigs’ by the scammers because the scammers will use elaborate storylines to ‘fatten up’ victims into believing they are in a romantic or otherwise close personal relationship,” according to one affidavit for a search warrant in Los Angeles.
The victims in the Brooklyn investigation include a 51-year-old woman who lost $23,000 after she was added to online chat groups discussing crypto investments, according to prosecutors. She downloaded an app from coinformat.com, made eight deposits and believed her investment grew to nearly $400,000. When she tried to withdraw her initial investment, she was told by chat administrators that she had to pay taxes. When she complained, she was blocked from the chat group and her money disappeared.
Prosecutors said her investment moved through multiple crypto addresses before it was deposited into an account at a foreign exchange and cashed out by someone possibly in China.
The DA’s office shared several warning signs of someone trying to lure a victim into a cryptocurrency scam. These include getting a “wrong message” text from a stranger trying to spark a friendship and talking about how much money they’ve made from a cryptocurrency investment. Potential victims are also added to group chats on WhatsApp or Telegram or solicited through Facebook by someone bragging about their crypto investments.
Authorities warn people not to trust crypto investment opportunities that seem too good to be true and not to make crypto investments based on advice from strangers. Avoid downloading investment apps from unverified crypto investment websites, they say.
People can check whether a cryptocurrency exchange is licensed to operate in New York State by going to https://www.dfs.ny.gov/who_we_supervise or calling the New York State Department of Financial Services hotline at 800-342-3736.
