The Department of Justice has seized over $100 million in a crackdown on cryptocurrency investment scams dubbed "pig butchering."
"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 the affidavit in support of the Los Angeles seizure warrant.
According to the U.S. Attorney's office, federal authorities seized over $112 million in assets during raids on six virtual currency accounts in Los Angeles, the District of Arizona and the District of Idaho. Investigators confiscated more than half of the funds from Los Angeles, totaling about $66.4 million in numerous cryptocurrencies.
Once the scammers develop this intimate relationship, they convince their victims to invest in fraudulent cryptocurrency trading platforms. According to authorities, the scammers made these investments seem legitimate by making fake investment portfolios with large returns on fabricated websites or mobile apps. They then funnel the funds to accounts controlled by the scammers and their partners.
United States Attorney Martin Estrada said these con artists have taken advantage of the recent popularity behind crypto to scam many Americans.
"We all know that investment scams are not new, but the use of digital currency to commit fraud presents new challenges to victims and to law enforcement trying to recover lost funds - which likely total billions of dollars in the so-called 'pig butchering' schemes," said United States Attorney Martin Estrada.
In the Los Angeles case, the scam started on LinkedIn when a man convinced her to move her existing cryptocurrency to another exchange. The man using the name "Fei Kuang" also convinced her to invest more money.
The victim began to realize the scam when she tried to withdraw her funds. The platform told her that in order to get her money she had to pay a 20% fee dubbed "taxes." She realized it was a scam when the platform kept demanding money from her. In the end, she lost about $2.5 million.
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