I met my scammer through a
dating app called Bumble, where He spent about six weeks
courting me before I made my First investment into a
cryptocurrency fraudulent Website domain, I lost 152,000 USD I will probably be spending the
next 10 years to pay off the Debts for completing the Manipulative techniques that
were used to get me to continue To invest in their platform. Karine fell victim to a scam
that's growing like wildfire, One that can take months to
fully execute. The scale of These crimes is just
skyrocketing, and I'm Specifically talking about pig
butchering. Scammers built trust With their victims before
gradually asking for money, Which often takes form in crypto
currencies. When we had Trad fi Thefts and tradfi schemes, it
was really difficult to get a Victim to go liquidate literally
everything they had. You might Have gotten a random text from a
stranger claiming they have the Wrong number, but they seem
friendly enough and continue the Conversation. Or you hit it off
with someone on a dating app. They might eventually try to
strike up a conversation about An investment strategy they
have, but government agencies Warn this could be the first
step to luring you to give up Your money. The FBI is latest
internet crime report published In April, shows that four and a
half billion dollars lost to Investment fraud were reported
in 2023 and 86% of those fraud Schemes mentioned
cryptocurrencies. This is why The crypto sector, in my
personal opinion, deserves a lot Of the scrutiny in the right
hands, it can be used safely in The wrong hands, it can carry
out devastation that we cannot Imagine. As these scams
proliferate, investor losses are Growing, but at the same time,
Blockchain investigators are Tracking down those stolen funds
in the hopes of getting them Back. You
Pig butchering smacks you in the
face and makes you wonder, what Is this? What is this woman
talking about in a way that Terms like financial grooming
don't pig butchering got its Name due to the nature of how
it's typically executed. The Victim is first fattened up. Our
scammers will spend up to four To five hours a day texting
their victims. The victim will Note that this scammer has
become the relationship they Always wish they had, holding
their hand through every piece Of it. They will direct our
victims to take money out of Their banks and invest it into
what they believe is a Cryptocurrency platform. The
fraudulent website platform that They used was mimicked after a
real cryptocurrency trading Platform called Kraken futures,
and the website was built in a Way that it looked like a
completely legitimate Cryptocurrency trading platform.
It had options spot our scammer Already knows, because they've
spent this extended time with Our victim, that our victim has
a 401, k, that they have college Funds for their kids, and this
scam will not end until our Scammer gets every last penny
that our victim has. The rise of Fake investment apps, especially
legitimate looking crypto Apps Has forced big tech to respond.
In April, Google sued two Developers, alleging they
created very convincing but Fraudulent investment apps for
the Google Play Store. The Filing says at least 100,000
individual users downloaded the Apps. They created fake
companies and fake apps that Enticed users to invest, and
when doing so, that investment Led to them losing their money.
Victims of these scams are often Dismissed as gullible, but pig
butchering is built on socially Engineered strategies that catch
victims at an optimal place and Time in their lives. We've seen
law enforcement officers fall Prey to these we've seen
lawyers. We've seen teachers and Not only do they know what to
say, but they know how to stage It and what works. By day three,
they should be using Terms of Endearment and calling them
honey. That 2023, internet crime
Report from the FBI found the
vast majority of reported Investment crime was tied to
crypto. The underlying Technology allows for peer to
peer money transfers, making it A great tool for remittances.
Transactions don't require Middlemen, which scammers use to
their advantage to move funds Around the world. It moves
quickly. It moves cheaply. All Our victim has to do is push a
button on their phone and They've transferred hundreds of
1000s of dollars. But the Blockchain, the same thing that
makes crypto so speedy and Potentially so appealing to
scammers also makes it perfect For tracking down stolen funds.
Chainalysis gave CNBC a behind The scenes look at its reactor
tool, which tracks the flow of Funds on a blockchain. We can
see what tools and services are. They are purchasing, reinvesting
those profits, but we can also See them cashing out to clusters
representing cryptocurrency Businesses like in exchange, for
instance. And this is a Beautiful lead for us.
Investigators and law Enforcement, tracing funds down
to an exchange can be key to an Investigation, as the exchanges
may have the information needed To identify criminals. Anti
money laundering and Bank Secrecy Act practices push
crypto exchanges to report Illicit activity to law
enforcement. We work with law Enforcement such as the FBI
behind the scenes, both in terms Of us helping to identify
potential victims and engaging With them, as well as engaging
for on asset recovery. In May, The tech against scams coalition
was launched by crypto exchange Coinbase, in collaboration with
other crypto businesses, as well As match group, which is the
parent group of Tinder and hinge And the global anti scam
organization to work together in Combating scams, including pig
butchering, one of the key Realizations we had as we were
all working independently and Occasionally bilaterally, other
is we were really better off When we had perspective from all
the different pieces and parts. But tracking down the stolen
funds is one thing. Seizing them
Is another challenge entirely.
With blockchain analytic Companies. They're the metal
detectors. They can see what's Happening. They monitor the
blockchain effectively. Companies like asset reality.
We're the shovel. We're the ones That make it easy for
governments to seize assets. Because right now, if a
government agency wanted to Seize an asset without us,
they're having to pick from lots Of different custodians. They're
having to manage their own Wallets. All of there's a big
admin burden to doing that. There's a risk around doing
that. Pig butchering cases Involve numerous partnerships
between the private and public Sectors, all cooperating across
multiple jurisdictions, some With weaker regulations than
others. The biggest challenge Presented by crypto Asset
Recovery is the almost Guaranteed, like a multi
jurisdictional footprint. So When your case is in the
$10,000.03 Overseas, likely entities,
probably six to nine to 12 Months of information gathering,
it just immediately falls into The we're sorry. We probably
can't take this case forward Category. What I found was that
a lot of my funds actually Routed to an exchange in
Thailand, and I identified Several addresses that were
chain hocked from the original Address, I deposited to a final
address. All the investigative Work that I can do on my end has
been completed. It's now a Matter of law enforcement taking
action. A year ago, my team was Successfully recovering maybe
25% of the victims that came to Us, but then really only
recovering maybe 10 to 15% of What they lost. On top of
limited success at recovery, Legitimate recovery sources and
law enforcement are contending With bad actors hoping to prey
on those who are desperate to Reclaim their life savings in
the aftermath of a scam, and Even if a victim is one of the
few who are fortunate to be made Whole, there is still another
loss being dealt with. They lost Their trusted partner on the
same day this all happened, and
So we see suicides. We see
people checking themselves into Psychiatric hospitals, we see
people just unable to cope. Crypto scams are only getting
more and more common. A Better Business Bureau report found
that crypto and investment scams Became the number one riskiest
in 2023 with 80% of people Targeted reporting lost funds.
At the same time, these scams Are getting ever more complex.
We're normally dealing with Scammers and helping law
enforcement go after people. We've now seen very many cases
where entirely AI created Identities, documentation,
passports are being used. That's Not something we've had to
tackle in the past, and this Problem is expanding around the
globe. According to the United Nations, the scammers are often
migrants trafficked into Southeast Asia and forced to
work under threats or use of Violence. The FDIC says the best course of
action to protect yourself from These scams is to remain
skeptical, and if you do lose Money, don't be too embarrassed
to contact law enforcement if Victims can report to their
local or federal authorities, That's the best way to have
visibility on these instances, Because the fact of the matter
is, they're more than likely not The only victim. What I
encourage folks to do, from a Prevention standpoint, is Don't make financial decisions
in alone, in isolation. Meanwhile, big tech and
blockchain detectives are Ramping up their responses to
these crypto focused scams. We Want our users to know that they
can trust us to not only sort of Proactively remove bad apps that
are on our site, but once apps Come through, they. That we're actually willing to
go one step further and prevent Those bad actors from doing it
again. We started something Called the crypto coalition, and
we started with 85 members of Active law enforcement back in
october 2022 Today, we number more than 1800
members of active law
Enforcement that are focused on
crypto currency investigations. We need to understand that this
is how bad guys move money Today, and we need to be ready
in law enforcement to Investigate those cases. We are
not there yet. You.
