After taking $1.2 million from Cy in a crypto fraud scam, the criminal ended their two-month online correspondence with the words, “Now you have to go kill yourself.” Cy, a Bay Area real-estate analyst, almost did.
“I lost more than just money. I lost my self-confidence,” says Cy, who committed himself to a Bay Area psychiatric ward with suicidal ideation. “I have ruined my family’s lives.”
Cy was a victim of “pig-slaughtering,” a type of online crypto fraud in which the victim is “fattened up” over months by a criminal who builds an online relationship, then guides their prey into crypto trading and seizes their money. The crime is on the rise here in Silicon Valley, federal law enforcement says.
“The FBI San Francisco Division has seen a rising trend in which romance scammers are persuading individuals to send money to invest or trade cryptocurrency,” an FBI spokesperson told The Examiner. The FBI estimates that 24,000 Americans lost more than $1 billion to romance fraud in 2021. Investigators consider it romance fraud – even though the fraudster and victim rarely meet – because criminals often use continuous affectionate texts called “love-bombing” to disarm victims.
An investigator for the San Francisco cybersecurity company Sift found that one in 20 people who approached her on dating apps was working the scam.
Even in the ruthless realm of online fraud, “pig-slaughtering” can be so devastating that it startles veteran investigators and victim advocates. “It’s psychologically dark,” says Grace Yuen of the Global Anti Scam Organization, a Singapore non-profit that says it has helped more than 1,400 victims, including many from the Bay Area. “They gain your trust. They chat with you for hours on end.” Then the criminals turn on their victims.
Yuen says of her group “Sometimes it feels like a suicide hotline.”
Here’s how “pig-slaughtering” works: A fraudster approaches a victim on social media, a dating app, or messaging platform, posing as a new friend, often an attractive young person. The fraudster moves the online conversation to an encrypted messaging app like WhatsApp, where it cannot be traced. Over weeks or months, the criminal uses what Yuen calls “very skillful tactics to groom and to gain an individual’s trust.” Cryptocurrency is brought up as a conversation topic, then as a potential investment, and finally with specific instruction in how to invest.
Real websites and apps, like crypto.com and MetaTrader 5, are used to induce the victim to invest their money. Then the fraudsters switch the real crypto platforms with replicas and the victims lose their money. The criminals reassure the victims that their lost money is easily regained, and a second theft occurs. The criminals then disappear, leaving the victims in despair.
“I really do not think that I can ever forgive myself,” says Cy, who requested to use a pseudonym to protect his career and family.
The crime appears to be happening more in Silicon Valley than elsewhere, says Yuen, despite the area’s tech savviness. Victims are engaging more online because they have been lonely in the pandemic. They have been curious about cryptocurrency, wondering how they could experiment with it. And, especially in Silicon Valley, they are perhaps overly confident that they could never fall for such a scam. But the patience and detail of the scam is just too convincing.
“What makes it so believable is the technological sophistication,” says Jane Lee, the investigator at Sift, who looked into the scams. “These relationships are built over time. It actually carries on and on, and it’s quite elaborate.”
Lee says she has connected with many “Bay Area-based folks that have either been targeted by the scammers or know somebody that has been targeted.”
R, another Bay Area victim of the scam, is an IT manager. “I never thought it could happen to me, because I use tech. I’ve written software.” But when a man approached her on LinkedIn she noted he was an alum of a top tech university in China she graduated from. Over a months-long process of WhatsApp chats, she was also guided to invest in cryptocurrency. Like Cy, she lost around $1.3 million.
“I feel so deceived,” says R, who also asked for anonymity. R and Cy have both found some solace in an online peer group at Global Anti Scam Organization, which requires them to verify their experience by providing their report to the FBI.
Cy wants to know why MetaTrader 5 is not facing more scrutiny, because users of the app have complained of fraudsters abusing the platform, and that has been detailed by GASO, the victims advocate organization. The company behind the app, MetaQuotes, is based in Cyprus and lists only mailing addresses as a way of contacting the company on its website. The Examiner found an email address for an executive at the company, but has not received a response to several requests for comment.
But one of the biggest tech companies in the world has also failed to respond to requests for comment on its role in pig-slaughtering. Apple approved the crypto trading app MetaTrader 5 for its App Store for ages 4 and up. It shows 15,000 downloads and its predecessor MetaTrader 4 shows 59,000. Dozens of reviews on the App Store warn of scams like the ones that robbed Cy and R for more than $1 million.
“They are allowing THIEVES TO TAKE YOUR MONEY,” one review says. “MT5 needs to look at and do something about the illicit brokers that use the app to create fake real time charts and scam innocents of millions of dollars,” reads another. “This application is full of scammers. A lot of lives have been ruined by this application,” says another.
Another platform misused by scammers, Crypto.com, responded that the company “is committed to security, and we take a proactive approach to managing and protecting against external threats, including scam and phishing campaigns.” The Singapore company, which hired Matt Damon to evangelize crypto to the masses, also encouraged users “to verify the account where they are sending funds before completing transfers.”
Coinbase, a San Francisco company and the biggest U.S. cryptocurrency exchange recently posted a blog post on this topic, and says it is “working with industry partners to take down these sites and developing ways to warn users when visiting known scam sites in order to help limit the damage caused by this type of scam.”
Cy, the fraud victim who had thoughts of suicide after he lost more than $1 million to a fraudster, said he tells new victims of the fraud not to feel dumb. “We didn’t get duped because we’re stupid,” he says. “We got duped because the syndicate was very sophisticated.”
This is what Cy tells “newbies” to the support group of victims. “Every week there’s at least two or three new members.”