The U.S. attorney for the Eastern District of North Carolina said that investigators seized almost $5 million worth of Tether, a cryptocurrency pegged to the dollar, which was allegedly defrauded from Americans as part of an investment scam.
The seized funds belong to the alleged victims of “pig butchering” schemes, according to an Aug. 22 statement from the district attorney’s office. The schemes are known as “pig butchering” because of the way that criminals feed promises of romance and riches to potential victims.
This type of scam began in China in 2019 and is now becoming more prevalent in the United States. In the current case, it is alleged that criminals defrauded people by first approaching them under the pretext of romantic relationships to build trust, according to the statement.
Once trust was earned, the alleged victims were introduced to a fake cryptocurrency trading platform and told that they could quickly make large profits.
The platform had the name and appearance of a legitimate crypto trading company. The fake platform promised abnormally large investment returns to entice the alleged victims into investing funds. After the investment, it became impossible to withdraw funds from the platform, with various excuses given, according to the statement.
For instance, investors were told that they needed to pay penalties or a tax to make withdrawals.
Once the funds were transferred into a crypto wallet under the control of scammers, they were allegedly moved through several other wallets to obscure their nature and ownership.
“Americans are losing their life’s savings to investment frauds as funds are being rapidly transferred to cryptocurrency accounts overseas,” U.S. Attorney Michael Easley said. “In this case, one victim lost his entire individual retirement account to a scam. We are clawing back every dollar we can, even when criminals are located abroad. We are determined to seize their illegal proceeds and return money to the victims.”
The Department of Justice acknowledged Tether for helping authorities with the recovery of funds. Tether said it assisted the FBI by freezing multiple crypto wallets, which led to the successful seizure of the funds.
The company said it has assisted more than 145 enforcement agencies in 40 jurisdictions, claiming back more than $108 million in stolen funds. More than 1,900 wallets have been blocked for illicit activity in the process, it said.
According to the FBI, investment scams defrauded $4.57 billion from Americans last year, a 38 percent year-over-year increase. Cryptocurrency scams alone accounted for $3.96 billion, 53 percent higher than in 2022.
Red Flags
In light of recent scams, Michigan’s attorney general listed some red flags to watch out for to identify potential pig butchering schemes.This includes strangers sending messages out of the blue and seeking to move the conversation quickly to WhatsApp or other social media sites. Such individuals may refuse to engage in video calling. The scammers could also discuss “insider investment knowledge.” Moreover, the investment opportunity may sound too good to be true.
The attorney general advised that people not “send money, trade, or invest with” anyone they have only met online and that they do not speak of their financial positions or investments.
“Don’t provide your banking information, Social Security number, copies of your identification or passport, or any other sensitive information to anyone online or to a site that you cannot verify is authentic,” the attorney general stated.
