Valentine’s Day: Binance warns of romance scams like ‘pig butchering’

In the United States, reports of such scams to the Federal Trade Commission jumped from 11,235 cases in 2016 to 52,593 by 2020, a 368% increase.

On Valentine’s Day, a spotlight is cast on the importance of safeguarding not just our hearts but also our financial resources against the backdrop of online dating’s rise, which fosters connections worldwide but also led to a spike in romance scams.

These scams, like Pig Butchering, cleverly exploit individuals’ emotions for financial gain. Cryptocurrency has become one tool for such deceit, yet leaders in the crypto industry, notably Binance, are actively working to mitigate these risks through enhanced security, compliance, and educational initiatives.

“Imagine someone convinced they’ve stumbled upon a profound connection via a dating app or social media. These fraudsters morph seamlessly, echoing your every sentiment and aspiration with uncanny precision. They latch onto the nuances of your conversation, crafting personas that seem perfectly aligned with your ideal match. Mention your enthusiasm for a certain hobby, and suddenly, it’s their obsession too. Share your hopes for a meaningful relationship and a future together, and they echo your sentiments, professing their readiness for commitment. It’s as though they have a direct line to your thoughts, expertly reflecting your desires back at yours,” said Tigran Gambaryan, Head of Financial Crime Compliance at Binance.

“Reflecting on my experiences as a Special Agent, I see a striking similarity in tactics. These manipulations are not unlike the schemes I’ve seen where fraudsters sell lies to get their hands on your money. The essence of their approach remains the same: exploit trust and fabricate connections to achieve their deceitful ends.”

368% rise in romance scams reported to US FTC

Romance scams have seen a significant rise globally, with a notable increase in the number of victims and financial losses over recent years. According to the 2023 Norton Cyber Safety Insights Report, more than one in four adults globally has fallen victim to an online dating or romance scam.

In the United States, reports of such scams to the Federal Trade Commission jumped from 11,235 cases in 2016 to 52,593 by 2020, a 368% increase. By 2022, the number of reported cases rose further, nearly reaching 70,000, with victims suffering a total loss of $1.3 billion. Despite cryptocurrency not being the primary method of payment in these scams, it accounted for 34% of the total reported losses. However, the overall share of crypto transactions associated with illicit activity is small and decreasing, thanks to efforts by industry leaders like Binance to bolster security and user education.

In Canada, the Canadian Securities Administrators’ (CSA) warned that romance scams increased 24% year over year (1,546 in 2020 vs. 1,928 in 2021), costing innocent people over $64 million in 2021 compared to over $27 million in 2020.

In the UK, the number of people duped by romance scams rose by 22% compared to the previous year, according to Lloyds Bank. Women reported higher average losses (£9,083) compared to men (£5,145). Individuals aged 55-64 were most frequently targeted, with a 49% rise in cases from 2022. Those aged 65-74 suffered the highest financial losses, averaging £13,123.

Binance’s 2023 data revealed that romance scams constituted about 2% of all reported scam cases on their platform, with the financial impact of these scams exceeding tens of millions of dollars and averaging nearly $14,000 in losses per victim. This highlights the significant financial toll of dating scams and the critical need for increased awareness and prevention measures within the crypto community.

Binance helped FBI and DoJ bring down $112m “pig butchering” scam

Binance’s commitment to security is evidenced by its global collaboration with law enforcement, processing thousands of requests for information, offering training, and increasing awareness of scams and their prevention among users. The advent of digital love-searching has undoubtedly transformed social interactions, but it has also opened avenues for scammers to exploit unwary individuals through fabricated online personas, building trust only to financially drain their victims.

In 2023, the company, with a team of over 70 members, handled upwards of 58,000 requests from more than 13,000 registered law enforcement officials around the world. This collaborative effort includes significant support to the FBI and DOJ in a major “pig butchering” scam, resulting in the seizure of over $112 million and the arrest of numerous scammers.

Binance also emphasized law enforcement education, having conducted 120 training sessions on blockchain and cryptocurrency legalities in 2023. These efforts are crucial in enhancing the security of Binance’s platform and safeguarding user investments amidst the rapidly changing cryptocurrency environment.

According to data from Binance, romance scams may be a small percentage of total scam reports, but result in substantial losses for victims, highlighting the severe impact of these schemes. Victims’ stories illustrate the cunning tactics employed by scammers, from investment scams dubbed “pig butchering” to fabricated emergencies requiring financial support. These narratives serve as cautionary tales, emphasizing the importance of skepticism and due diligence in online romantic interactions.

Last December, the US DoJ also brought charges against four individuals over a $80 million ‘Pig Butchering’ scam. This kind of romance scam which emerged in China and has since become widespread globally, has already come to the attention of leading regulators, such as the CFTC.

Even MetaQuotes, the home of MetaTrader 4 and MetaTrader 5, has indirectly fallen victim of these scams as the trading technology popular wasn’t sufficiently capable of keeping its white label platform away from scammers. Its lax behavior cost the firm a suspension from Apple’s App Store for a few months. The iOS versions of MetaTrader 4 and MetaTrader 5 were reinstated in March 2023.

Scam prevention through real-time risk monitoring and user education

Binance’s approach to user safety encompasses collaboration with law enforcement, extensive training for officials, and a proactive stance on scam prevention through real-time risk monitoring and user education. The platform’s efforts in training law enforcement and raising user awareness are pivotal in combating the evolving threat of scams in the crypto industry.

To protect oneself from falling prey to romance scams, especially those involving cryptocurrencies, it’s essential to remain vigilant. Sticking to communication within dating apps, being wary of too-good-to-be-true profiles, taking relationships slowly, being skeptical of financial requests, and never sharing sensitive personal or financial information are all crucial steps in safeguarding oneself against these deceptive tactics.

As we navigate the digital domain in search of companionship, it’s vital to remember that not all online personas have honest intentions. By remaining cautious and heeding the signs of scams, we can protect both our emotional well-being and our financial security.