Cryptocurrency Investment Fraud
Cryptocurrency investment fraud, which the media commonly describes as "pig butchering," is one of the most prevalent and damaging fraud schemes today.
Scammers, through various means of manipulation, convince victims to deposit more and more money into financial “investments” using cryptocurrency. In truth, these investments are fake; all victim money is under the control of—and ultimately stolen by—criminal actors, usually overseas. As a result, victims typically lose all money they invested.
Learn more about cryptocurrency investment fraud and the process scammers use to find potential victims. If you believe you've been a victim of this scam, stop sending money to the scammers and file a report at ic3.gov.
1. The Selection of the Victim
Scammers use a variety of methods to initially lure and contact victims. Here are some of the most common methods:
- Social Media: Scammers use social media to reach out to victims directly—by messaging them—or indirectly through deceitful job advertisements or investment opportunities that can be found on all main social media platforms.
- Texting: Scammers text victims pretending they misdialed a number, sending a photo of themselves, or saying they work for a company that is hiring for job opportunities.
- Dating Sites: Scammers create thousands of fake dating profiles on all common dating sites and match with victims to establish a romantic relationship based on trust.
Bottom Line: If you met someone through a method described above, and that person pitched an investment opportunity that involved cryptocurrency—beware: this is likely cryptocurrency investment fraud.
Report Cryptocurrency Investment Fraud
Visit ic3.gov, the FBI's Internet Crime Complaint Center (IC3), to report cryptocurrency investment fraud scams.
Red Flag: Once the victim agrees to continue communicating, it's common for the scammer to ask to move their messaging to another platform, including WhatsApp or Telegram—e.g., "Hey, do you have WhatsApp, let’s talk there." They may use a different phone number from the one the victim may have been contacted from initially.
For variants involving a professional relationship only, scammers may invite victims to join chat groups, where there are often many others in the same chatroom—most of whom are scammers impersonating "happy" clients.
2. The Building of Trust
Once initial communication has been established, scammers seek to deceive victims about who they are (their "persona") and what they want (their "desires") to forge trust with the victim. Tactics vary, but below are common characteristics of cryptocurrency investment fraud scammer personas:
- Excessive flattery
- Empathizing with, and often suffering from, similar life events as the victim (e.g., if a victim is going through a divorce, then the scammer may be going through a divorce, too).
- Suffering from a hardship that requires help from the victim.
- Sharing pictures, often selfies, of themselves.
- Offering to meet in person but making those meetings contingent upon the victim accomplishing a task (e.g., we can meet once you raise enough money).
- Offering to meet in person, but always finding an excuse at the last minute for why they can’t.
- Expressing a strong romantic interest in the victim.
- Agreeing to some video conference calls but preferring instead to speak over text.
3. The Pitch
Once trust is established with victims, criminals introduce the topic of investing. It's common for scammers to say they themselves—or people in their family or close network—are experts in such investments. They may promise they can bring the victim in on "the ground floor." Types of investments can vary, however common ones include binary trading, liquidity mining, and gold futures.
4. The Initial Investment
Once the scammer convinces the victim to participate in their scheme, the scammer will instruct the victim how to invest the money, as follows:
- Open a cryptocurrency account at a reputable exchange.
- Transfer money from a traditional bank account to the new cryptocurrency account.
- Convert the money—now hosted on the cryptocurrency exchange—to the cryptocurrency type the scammer specifies, e.g., Bitcoin, Ether, Tether.
- Open an account on the "investment platform" provided by the scammer or an individual or group that the scammer directed the victim to.
- Deposit the cryptocurrency to the investment platform either directly or through a private wallet.
Investment Platforms: Note that these "platforms" exist in the form of what appear to be traditional websites, either accessible via the web or through a specific browser only accessible via cryptocurrency applications. Common factors include:
- Registration using an email address or phone number.
- Two-factor authentication (e.g., a phone number + an email address) to log in.
- A website name that closely mimics—or "spoofs"—a legitimate site.
- A professional-looking site design that shows the portfolio in an appealing manner.
- A customer support portal used to communicate about investments and withdrawals.
Did You Know?
Scammers may use deepfake technology and/or hire real people to engage with you on the phone. Even if they're real people you're speaking to, they could be part of a scam.
Cryptocurrency Job Scams
Cryptocurrency job scams begin when scammers, masquerading as employees of legitimate companies, recruit victims and require them to deposit their own money in order to complete the job.
Red Flag: Were you introduced to the investment scheme by someone in person? If it was someone you know, it could be that they, too, are unwitting victims, and you should warn them immediately. If it was a stranger, and they pitched the idea not long after meeting you, it is entirely possible they are part of a criminal network supporting these schemes.
5. The “Growing” Investment
Once the victim starts to "invest," returns shown on the investment platform will appear to be extremely lucrative, encouraging the victim to invest more and more. It is common in the early stages for the scammers to allow victims to withdraw not only the original deposit but the earnings as well. This is meant to trick victims—a means to reassure them that the platform is legitimate. Scammers use various means to “sweeten the pot,” or encourage further investing. Examples include:
- "Matching"—Providing their own funds to the victim’s portfolio to help the victim reach an (arbitrary) investment goal.
- "Scarcity"—Stating that returns or investment opportunities are only available in a short time period.
6. Taxes, Fees, and the End of the Scheme
Once the victim is ready to withdrawal all their earnings, they will find their account frozen and an arbitrary requirement will arise, usually in the form of paying "taxes" or "fees" to unlock their funds.
This is a trap: it is simply another method used by the scammers to try and convince victims to invest even more money.
It can be a particularly devastating point in the scheme, as victims will often pay more money to unlock their funds than any amount they previously deposited. At this point, there is usually nothing the victim can do: the scammers will never unlock the funds and it's likely they have already withdrawn those funds into criminally controlled cryptocurrency wallets inaccessible to the victim. In the end, the victim loses all the money they deposited into the scheme.
The FBI is investigating fraudulent cryptocurrency investment platforms and companies. The FBI may attempt to contact you via email and phone call to provide crucial information regarding this matter if you have been identified as a potential victim of a cryptocurrency investment fraud. Should you not answer, we will leave a voicemail and provide instructions on how to verify our identity.
The FBI will never ask for money, move communications to private messaging apps, or request bank account details or personal identifying information.
If you feel that you are a victim of a cryptocurrency investment fraud, stop sending any money to the suspected criminals, file a report at FBI's Internet Crime Complaint Center at ic3.gov. Please do not notify the suspected criminals of the FBI’s involvement, which may compromise law enforcement's ability to investigate.
When filing a report at ic3.gov, if possible, please include the following:
- Information regarding how the scammer initially contacted you and how they identified themselves. Include identifying information such as name, phone number, address, as well as email addresses and usernames of the scammer.
- Financial transaction information such as the date, type of payment, amount, account numbers involved (to include cryptocurrency wallet), the name and address of the receiving financial institution, and receiving cryptocurrency addresses.
If you believe you or someone you know may be a victim of a cryptocurrency investment scam, immediately submit a report to ic3.gov or contact your local FBI field office and provide as much transaction information as possible.
For more information, see the following FBI Public Service Announcement: Increase in Companies Falsely Claiming an Ability to Recover Funds Lost in Cryptocurrency Investment Schemes (August 11, 2023, Alert Number 08112023). Be wary of anyone claiming they can recover your funds, as this may be another scam.
Information to Report to the FBI
When submitting a report to ic3.gov, the most important information you can provide are transaction details. Transaction details include cryptocurrency addresses, amount and type of cryptocurrency, date and time, and transaction ID (hash). These unique identifiers vary in length and look like long strings of random letters and numbers. Please see examples of important transaction details in the table below. If you are unsure whether transaction information you have is relevant, please include it.
- Transaction Detail: Cryptocurrency Addresses
- Example: 0x58566904f57eac4E9EDd81BbC2f877865ECd35985
- Transaction Detail: Amount and Cryptocurrency Type
- Example: 1.02345 ether
- Transaction Detail: Dates/Times
- Example: 1 January 2023, 12:01 AM EST
- Transaction Detail: Transaction ID (hash)
- Example: 0xfa485de419011ceefdd3cd00a4ff64e52bf9a0dfa528e4fff8bb4c9c
What if I do not have transaction information?
If you do not have transaction information, please still submit a report to ic3.gov and provide as much information as you have.
What other information should I provide?
Provide any other information you may have about the scam, to include:
- Where and how you first encountered the scammer.
- Your communications with the scammer (for example, emails or texts) and associated identifiers such as names, email addresses, and phone numbers.
- Any domain names, website addresses, or applications the scammer instructed you to use.
- Any two-factor authentication or "one time passcode" information.
- Any cryptocurrency exchanges you used to send or receive funds.
- The timeline of the scam.
Tips for Avoiding Cryptocurrency Investment Fraud
The FBI has identified potential ways individuals can recognize and deter this activity:
- If an unknown individual contacts you, do not release any financial or personal identifying information (PII) and do not send any money.
- Do not invest per the advice of someone you meet solely online.
- Verify the validity of any investment opportunity from strangers or long-lost contacts on social media websites.
- Be on the lookout for domain names that impersonate legitimate financial institutions, especially cryptocurrency exchanges.
- Misspelled URLs, often with a slight deviation from the actual financial institutions' website, may be fake.
- Do not download or use suspicious looking apps as a tool for investing unless you can verify the legitimacy of the app.
- If an investment opportunity sounds too good to be true, it likely is. Be cautious of get rich quick schemes.
- Confirm the validity of any investment opportunity or cryptocurrency investment website or app.
- If you already invested funds and believe you are a victim of a scheme, do not pay any additional fees or taxes to withdraw your money.
- Do not pay for services that claim to be able to recover lost funds.
Red Flag: If the scammer says you cannot access your account due to excuses such as tax or fee requirements, we strongly recommend that you do not pay them. Paying the scammers will not result in you recovering your funds.
