The Investor Protection Unit of the Delaware Department of Justice has issued a Summary Order to Cease and Desist against respondents linked to a cryptocurrency scam known as the “pig butchering scam.” A twist on the typical romance scam, the pig butchering scam is a long-term fraud in which victims are groomed over time to make investments using cryptocurrency, only to find that what they thought was a safe investment was a scam. It is estimated that this international scam involves thousands of victims across the country with losses into the billions of dollars.
The Investor Protection Unit received a complaint from a senior who had invested a significant chunk of his retirement savings in what turned out to be a pig butchering scam. It began when he was contacted online by an unknown person who urged him to purchase cryptocurrency to make investments. At the behest of the scammer, the victim initially invested approximately $275,000 of his retirement funds in cryptocurrency using a website, bybit.us, which tricks users into thinking it is legitimate by mimicking the website of a large cryptocurrency exchange, Bybit.com. Ultimately, the victim was told he had to pay significant fees before being able to withdraw his crypto; he took out a loan and paid the fees, but was still unable to make a withdrawal.
Working with Inca Digital, a data analytics company, the Unit traced the victim’s cryptocurrency to a number of different virtual wallets on the crypto exchange OKX.com. The Order prohibits the persons and entities affiliated with the wallets from withdrawing or otherwise moving assets owned by the victim. Although OKX, the exchange holding the wallets, is named in the Order, it is not accused of any wrongdoing; rather, in its role as the exchange, it is prohibited from permitting parties to move the fraudulently-obtained crypto, thus essentially freezing the accounts holding assets belonging to the Delaware victims.
“High-tech con artists have adapted traditional romance scam methods to take advantage of the hype surrounding cryptocurrency,” AG Jennings said. “The use of crypto to commit fraud, while increasingly common, presents new challenges for law enforcement. Today’s order takes a first step toward protecting Delaware investors from the pig butchering scam by freezing funds belonging to the victim.”
This is the second time the Unit has issued an order intended to freeze cryptocurrency lost by victims of the pig butchering scam. Unfortunately, the scam continues to proliferate, impacting victims in Delaware with increasing frequency.
The Investor Protection Unit offers the following tips for investors:
1. Be wary of someone you don’t know contacting you through any virtual platform looking to engage in frequent conversations.
2. Don’t get drawn into online conversations with unknown people who claim to have made a lot of money in cryptocurrency.
3. Remember that there is no such thing as a risk-free investment. If something sounds too good to be true, it probably is.
Deputy Attorney General Lindsay Nasshorn, Investor Protection Director Jillian Lazar, and Special Investigator Bill Boileau are leading this matter for the DOJ.
If you believe you are a victim of the pig butchering scam or other cryptocurrency investment scam, please file a complaint with the Investor Protection Unit, available at: https://attorneygeneral.delaware.gov/fraud/ipu/ipu-complaint-form/.