LOS ANGELES – The Department of Justice has seized virtual currency worth an estimated $112 million linked to cryptocurrency investment scams commonly called “pig butchering.”
“The victims in Pig Butchering schemes are referred to as ‘pigs’ by the scammers because the scammers will use elaborate storylines to ‘fatten up’ victims into believing they are in a romantic or otherwise close personal relationship,” according to the affidavit filed in support of the Los Angeles seizure warrant. “Once the victim places enough trust in the scammer, the scammer brings the victim into a cryptocurrency investment scheme.”
Seizure warrants for six virtual currency accounts were authorized by judges in Los Angeles, the District of Arizona, and the District of Idaho. In the Los Angeles matter, a United States magistrate judge authorized the seizure of an account containing approximately $66.4 million in various cryptocurrencies after finding probable cause that the funds were derived from wire fraud schemes, the DoJ said.
Proceeds Laundered
The Justice department said the six virtual currency accounts were used to launder proceeds of various cryptocurrency confidence scams. In these schemes, fraudsters cultivated long-term, online relationships with victims, eventually enticing them to make investments in fraudulent cryptocurrency trading platforms.
In reality, the funds sent by victims for these purported investments were instead funneled to cryptocurrency addresses and accounts controlled by scammers and their co-conspirators, the DoJ said.
Fabricated Websites
Under the pig butchering scheme, the Justice department said the scammer attempts to create the appearance of legitimacy by fabricating websites or mobile apps to display a bogus investment portfolio with large returns, the affidavit states.
In relation to the Los Angeles-based account seizure, the FBI has identified at least 10 victims who were unable to withdraw funds they had invested, with the seized account containing some funds from all 10 victims.
The affidavit in the Los Angeles seizure warrant discussed a series of cryptocurrency investment scams, one of which targeted a professional woman who was contacted on LinkedIn by a man who used the name “Fei Kuang.”
Scammer Insists on ‘Taxes’
After learning that the victim already had a small cryptocurrency account, “Fei Kuang” offered to help the victim, eventually convincing her to invest more money and to move her funds to another, presumably fraudulent, trading exchange,” the DoJ said. “When she tried to withdraw her funds, she was told she had to pay a 20% in “taxes.” When the trading platform continued to demand more money, the woman realized she was the victim of a scam which cost her approximately $2.5 million.”
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