The impact of pig-butchering scams
The FBI's recent reports on pig-butchering scams have revealed the devastating financial impact on victims. Thousands of individuals have fallen prey to these scams, resulting in millions of US dollars in losses. However, it is possible that the true extent of the problem is even more significant, as many victims are too embarrassed to report their experiences or are unaware that they have been scammed.
By closely monitoring the chat groups and identifying the fake brokerage sites, we were able to track down some of the cryptocurrency wallets controlled by these scammers. Based on one group of scammers alone, we estimate that this group has netted almost US$4 million based on transactions made from January to March 2023, indicating the severity of this scam. Table 1, which shows the total amount of funds transferred to each brokerage site and their corresponding cryptocurrency wallets, gives a clearer picture of the magnitude of this operation.
|Scam Broker||Token||Crypto Wallet||Token Value||Estimated US$|
|ETH ||0x68b1f66B0Ef9b0B2B7d45901616B222dca690bd4||42.926882 ETH||63,072.13|
Table 1. A summary of the total transactions transferred to the cryptocurrency wallets owned by a group of scammers
One striking aspect of pig-butchering scams is the victims’ demographic profile. The large transaction amounts deposited into the scammers' accounts, ranging from US$10,000 to US$100,000, suggest that the targets are not victims with limited savings. Instead, these scams appear to be targeting a more financially established demographic, including professionals with high salaries and individuals nearing retirement. Figure 13 shows that some of the transactions made to a scammer's cryptocurrency wallet were in the five- to six-figure range.
Figure 11. Breakdown of transactions made to a cryptocurrency wallet controlled by pig-butchering scammers, 40% of which are in the US$1,000 to US$9,999 range
It is plausible that scammers are focusing their efforts on victims they consider “big fish,” as these individuals are more likely to have access to large sums of money. These individuals are also potentially more susceptible to the scam because it’s possible that they would like to grow their wealth and maintain their lifestyle. In some cases, these individuals might overlook red flags in their eagerness to capitalize on seemingly lucrative opportunities. According to the 2022 IC3 report, the victims of these scams typically fall under the 30 to 49 age range. This further highlights the scammers' focus on individuals with greater financial resources.
Another possible target group for pig-butchering scams are individuals approaching retirement who might have substantial savings and are actively seeking investment opportunities to secure their financial future. It’s possible that scammers will exploit this sense of urgency and vulnerability to convince victims to invest in their fraudulent schemes.
According to the same IC3 report, victim losses pertaining to investment fraud have reached a whopping US$3.31 billion, which is considerably higher than other types of fraud. Included in this staggering amount are complaints pertaining to cryptocurrency investment fraud, which reached US$2.57 billion last year. These alarming numbers further emphasize the importance of raising awareness and taking proactive measures against these malicious actors to protect individuals' hard-earned savings and financial futures.
Figure 12. Top reported fraud by victim losses in 2022
Source: 2022 Federal Bureau of Investigation Internet Crime Report