US DoJ charges four individuals over $80 million ‘Pig Butchering’ scam

Pig Butchering scams have notably utilized trading platforms like MetaTrader, which was briefly suspended from the App Store. MetaQuotes has since tightened the requirements for white label providers in order to put an end to FX and Crypto scams via MT4/5.

The U.S. Department of Justice has recently charged four individuals for their alleged involvement in a sophisticated cryptocurrency investment scam, often referred to as “pig butchering.”

The scam, which originated in Southeast Asia, combines elements of investment schemes, romance scams, and cryptocurrency fraud. It’s named “pig butchering” based on the Chinese phrase “Shāz Hū Pán,” which metaphorically describes the process of gaining a victim’s trust and then exploiting it for financial gain.

Lu Zhang, Justin Walker, Joseph Wong, and Hailong Zhu are accused of conspiring to open shell companies and bank accounts to launder the proceeds from these scams, which included at least 284 transactions and resulted in over $80 million in victim losses. More than $20 million was directly deposited into accounts associated with the defendants.

The rise of investing scams via social apps

The essence of the “pig butchering” scam involves fraudsters contacting potential victims through various platforms like dating services, social media, or direct messages, often pretending it’s a wrong number. Over time, they establish a relationship, gain the victim’s trust, and eventually introduce a business investment opportunity using cryptocurrency. The investment platforms used in these schemes are fraudulent and controlled by the scammers, displaying false gains to entice further investments. Eventually, victims find themselves unable to withdraw or recover their funds, leading to significant financial losses.

If convicted, Zhang and Walker face a maximum penalty of 20 years in prison. The U.S. Secret Service’s Global Investigative Operations Center is investigating the case, which is jointly prosecuted by the U.S. Attorney’s Office for the Central District of California and the Computer Crime and Intellectual Property Section’s National Cryptocurrency Enforcement Team (NCET)​​​​​​.

Regarding the intersection of pig butchering scams with the FX industry, these scams have notably utilized trading platforms like MetaTrader. Due to the rise in fraudulent activities linked to these platforms, companies like Apple have previously suspended services like MetaQuotes until stricter regulations and requirements were implemented to curb such misuse. This response indicates the growing concern and need for tighter security measures in the financial trading and cryptocurrency sectors.

To avoid falling victim to pig butchering scams, it’s crucial to be wary of unexpected contacts, especially those promising high returns on investments or those mixing online dating with investment advice. One should always research and verify the legitimacy of investment platforms and be cautious of any investments that demand upfront payment in cryptocurrency​​​​​​.