Chinese crypto scammers took advantage of booming token prices and pandemic-driven travel restrictions to swindle romance-seeking Chinese speakers out of millions of dollars, reports the Financial Times (FT).
China blanket banned crypto trading in September 2021. However, this didn’t deter scammers from targeting Chinese speakers living in other parts of the world.
According to FT, so-called “pig butchering” scams — named because of the way con artists “fatten up” their targets — are relieving thousands of unfortunate victims of their life savings. This type of swindling shows no sign of slowing as perpetrators adapt to attempts to shut them down.
“It starts with an online relationship, scammers ‘fatten’ up their victims with romantic messages, grooming them on social media,” Jan Santiago, deputy director of US-based Global Anti-scam Organization, told FT.
They’d also try to get information about the victim’s financial situation, casually asking them about their salary, how much their house was worth, and so on.
Scammers would typically encourage women to buy crypto on legit exchanges before talking them into moving to fake websites that look like the real thing. According to Taiwan’s National Police Agency, these shady sites included “KrakenCoin” and “CoinbaseCCY.”
These imposter sites pull out all the stops to look legitimate, going as far as to include price trackers and 24-hour customer service contacts. They also let the women convert some assets into fiat to convince them everything was perfectly legal.
The con was made easier by COVID travel restrictions, giving the fraudsters the perfect excuse to never meet in person.
According to Michael Tang, a New York-based lawyer working with Chinese clients in the US, the methods used are similar to those used by organized crime gangs in China.
There are even handbooks for Chinese crypto scammers that explain exactly how the cons work, including tips like making crypto investing seem like a game that the criminals and lonely marks can play together.
Chinese crackdown forced scammers to shift focus
China started to hit back at crypto-related crime in 2017, with police in the country not only rounding up gang members but working to warn the public of potential scams.
However, as reported by FT, this only served to push gangs to new territories and shift their focus to potential targets outside mainland China.
The smarter gangs also started to use tech to stay one step ahead of the law, switching through websites and swapping SIM cards to remain undetected.
According to the Federal Trade Commission, in the past five years around $1.3 billion has been reported lost to romance scams.
These losses peaked last year with a total of $547 million.