Pig Butchering Scams: Crypto’s $5.5B Crisis in 2024
Cryptocurrency investors have become a major target of a new kind of fraud known as “Pig Butchering” scams.
These scams, which have been used to defraud a total of over $5.5 billion and have currently been hitting the crypto space really hard, are one of the biggest threats to crypto today. They are not just your ordinary scams, though. Pig Butchering scams are incredibly well-crafted and executed. The scheme gets its name from the way the scammers fatten up their victims (as in feeding a pig) before making off with the victims’ life savings. The nature of this scheme means it is devastating to any target that it hits.
$5.5B stolen in 2024: Pig Butchering scams are crypto’s biggest threat 🚨
A must-read from @Cointelegraph on our latest Cyvers report: 👇
— 🚨 Cyvers Alerts 🚨 (@CyversAlerts) February 20, 2025
The Rise of AI-Powered Fraud
Pig Butchering scams are highly sophisticated, with the authors of the scams taking advantage of both human psychology and advanced technology. They usually go after people for weeks or even months, establishing and building a relationship with the target through social media, email, or other online communication channels. They take their time and gain the trust of the victim, presenting themselves as near-experts or professionals who can really help grow their investments. At the center of this scheme is the illusion that the victim has access to an extremely lucrative investment opportunity—in cryptocurrency.
What makes these cons especially risky in 2024 is the way artificial intelligence (AI) is being utilized. AI tools, now capable of producing nearly indistinguishable and even more convincing content, have taken the scam game to a whole new level. What used to be an operation involving a handful of rudimentary fake emails is now a sophisticated scheme run by looking-good AI and a lot of angry, desperate scammers (you don’t even want to know what they do to the crypto they “mine” in their basement). All of this is putting at least twice as many of your friends and family at risk as it did last year.
Once the scammer has constructed sufficient trust, they coax their targets to plow in huge amounts of money, usually directing them to invest in bogus or fraudulent platforms. These platforms may seem like the real deal, with user interfaces that are nothing short of breathtaking and reviews that make the platforms sound miraculous. Nonetheless, after they’ve poured in the amounts we’ve already noted, the victims discover that their requests to withdraw everything have been met with some combination of resistance, half-hearted excuses, and even a few outright denials. Once everything’s said and done, they’re left to some serious soul-searching over why the platforms they believed in weren’t “legit af.”
75% of Victims Face Financial Ruin
The damage done by these scams is colossal. Around 200,000 identified cases exist on just the Ethereum network alone. Pig Butchering scam victims lose serious money—and I mean serious. An unbelievable two out of every three with a reported amount claim they lost over half their net worth. And the amounts vary widely; one mid-range report put the average Pig Butchering loss at a staggering $1.4 million. It’s real. And it’s going up.
The real worry, though, is the emotional and psychological toll this fraud takes on its victims. It’s one thing to be swindled out of your money; it’s another to know you were taken in by a con artist. Many people, once they realize how thoroughly they were taken, try to cope with feelings of shame and regret. Even in the best-case scenarios, where individuals are only swindled out of a few thousand dollars, the effects can be long-lasting.
Major Centralized Exchanges Hit Hard
Individual investors are not the only ones affected by these scams. Even the largest cryptocurrency players have been hit by them. Of the five biggest centralized exchanges (CEXs), three reportedly rank among the most targeted platforms for these fraud schemes. These exchanges, which are typically the most trusted and used for crypto transactions, have become implicated in the storm swirling around these scams, and criminals are using them as part of the scam setup and payoff process. While CEXs have made efforts to crack down on fraud, these stops have been few and far between, and CEXs have become a too-trustworthy part of a criminal’s solar system for pulling off a successful scam.
Some of the world’s largest exchanges are implicated, either via the platforms they provide for scammers or through the platform’s being a draw for the victim to trust them. Is this a safety problem with the exchanges? With the use of crypto itself as a conduit for not just a swindle but an apparently straightforward way to launder money, what is to be done to protect investors? Here are some thoughts on possible safeguards.
The Need for Vigilance and Security
Although cryptocurrency may be safe, the technology that underpins it is not. Learning from events like the Pig Butchering scam, we must re-evaluate how we perceive security in the crypto world and strengthen our defenses against not only old-school scams but also the new, more sophisticated threats that AI and other emerging technologies will enable.
A crucial need arises for increased regulation and stronger consumer protections in the crypto space as a result of this new kind of shapeshifting fraud. The digital asset industry is maturing, and in this new phase, all sorts of stakeholders—from individual investors to large exchanges—really need to collaborate to better safeguard themselves against these kinds of scams. Otherwise, the Pig Butchering fraud scheme will just keep plowing ahead, endangering not just the projects that lapse into it but potentially anything in the crypto space, and putting at least several billion dollars’ worth of assets in jeopardy.
To summarize, 2024’s Pig Butchering scam resulted in a $5.5 billion loss, starkly reminding us that cryptocurrencies, while offering financial innovative opportunities, also carry some perilous new risks. The federal government could do investors a service by being more transparent in its regulatory approach, which would allow the crypto industry to gain a clearer sense of how to better protect consumers.
Disclosure: This is not trading or investment advice. Always do your research before buying any Metaverse crypto coins.
