On April 3, 2023, the Department of Justice (DOJ) announced the seizure of over $112 million in virtual currency connected to alleged cryptocurrency investment scams. The DOJ authorized seizure warrants for six virtual currency accounts following allegations that these accounts were used to launder proceeds from various cryptocurrency confidence scams. The targets reportedly engaged in long-term relationships with victims met online, persuading them to invest in fake cryptocurrency trading platforms. The funds sent for these supposed investments were funneled to cryptocurrency addresses and accounts controlled by scammers and their accomplices. Crypto Criminal Defense Lawyer
According to the FBI, the highest number of reports came from victims between the ages of 30 and 49. In these schemes, often called “Sha Zhu Pan,” a Chinese phrase that loosely translates to “pig butchering,” scammers often target their victims through social networking and online communications platforms, dating websites, and phone calls and text messages that are meant to appear to have been misdialed. After gaining the trust of their victims – sometimes over a period of months – scammers eventually introduce the idea of trading in cryptocurrency. They then direct victims to cryptocurrency investment platforms or to co-conspirators posing as investment advisors or customer service representatives. Scammers control websites that are built to look similar to legitimate trading platforms, applications that victims download onto their phones, or malicious smart contracts accessed through cryptocurrency wallet software. Once victims make an initial “investment,” the platforms purport to show substantial gains. Sometimes, victims are even allowed to withdraw some of these initial gains to further engender trust in the scheme. It is not until a large investment is made that victims find that they are unable to withdraw their funds. Even when a victim is denied access to their funds, the fraud is often not yet over. Scammers request additional investments, taxes, or fees, promising that these payments will allow victims access to their accounts. These scam operations often continue to steal from their victims and do not stop until they have deprived victims of any remaining savings. DOJ Press Release
The DOJ noted in the press release that in 2022, investment fraud led to the highest losses of any scam reported to the FBI’s Internet Crimes Complaint Center (IC3), totaling $3.31 billion. Cryptocurrency-related frauds, including "pig butchering" schemes, represented the majority of these scams, with reported losses increasing by 183% from 2021 to $2.57 billion in 2022. The FBI noted that the highest number of reports came from victims aged between 30 and 49.
This blog post was prepared with the assistance of ChatGPT-4 AI. Nothing in this post should be considered legal advice or the creation of an attorney-client relationship. This blog is strictly for informational purposes only.