SAN FRANCISCO (KGO) — A Bay Area software developer has lost more than $1.3 million in a widespread cryptocurrency scam that is draining the bank accounts of Silicon Valley investors.
Federal investigators say the scam known as pork butcher specifically targets Asian Americans in the Bay Area, according to the original I-Team report.
The story of the last victim
For a woman we call “R”, it all started on LinkedIn.
“I let my guard down,” she told ABC7.
Investigators confirm that a man who calls himself MingGuang Zhang contacted R on a professional networking site.
R says Zhang claimed to be a CTO of a Fortune 500 company in the United States
“This person had a very impressive profile,” R said. “He said he went to the same school as me in China.”
Their friendly chat soon moved to WhatsApp. R expressed interest in getting into cryptocurrency and Zhang offered to help.
“He started talking, why don’t you do something with me?” said R. “I can help you earn some money.”
It seemed easy. R first sent three payments equivalent to $65,000 from his bank to a trading app suggested by Zhang. The app showed that she made a profit of 20%.
So Zhang encouraged her to open a new account at another bank. The alleged scammer told her that if she used her retirement fund to invest, she could return it within 60 days. Redeemed his IRA and transferred $900,000 at the end of October.
Zhang sent him a platform to make the trades that seemed legit. The platform falsely showed that R had already made a profit. But, she learned the hard way – it was a scam.
“Once the money got in there,” R said. “It’s gone.”
Cryptocurrency is a high risk investment but can have great rewards.
R gambled and lost everything.
But Zhang kept promising that he could help her get the money back. He said he would put in $1 million as long as she could send more money.
Feeling desperate, R consulted with her husband and sold $400,000 worth of shares to make the final payment through the platform.
In a few minutes, it was gone.
“It’s been a nightmare,” R said in tears.
How the pig slaughter scam works
Pig slaughter has become a nightmare for victims around the world.
“It’s basically two people who meet on a dating site or social media platform and develop a fake relationship based on fake trust,” said US Secret Service agent Shawn Bradstreet. . “Usually the suspect convinces a person to invest in a cryptocurrency or some type of investment program.”
According to the FBI, the scam started in China in 2019, but has now become more widespread in the United States.
Crack down on crypto crimes
ABC7 News’ I-Team spoke with the Digital Asset Technology Alliance, the nation’s first and only team staffed by the U.S. Secret Service to crack down on hog butchering cases.
Stephanie Sierra: “What are you doing to crack down? »
Shawn Bradstreet: “Right here locally, we’ve actually created a team. It’s a Digital Asset Technology Alliance, and it specifically targets digital assets.”
Special Agent Frey showed the I-Team how suspects are using new technologies to create counterfeit crypto sites that mimic legitimate businesses. An example being “CoinbaseBIT”, a fake remake of the legitimate crypto trading site Coinbase.com.
“So it’s just window dressing,” said US Secret Service financial analyst Andrew Frey, pointing to a fake crypto website.
Investigators say some of these apps may appear legitimate – claiming to be recommended by Apple with a rating of 4.9.
“For most people, there aren’t really a lot of red flags or red flags going off with these sites,” Frey said.
To avoid falling victim to these bogus sites, always search for the app or website first and check the URL for misspellings. Frey shared an example that impersonated the legitimate company Coinbase.
According to Frey, the counterfeit site looks legitimate but instead of coinbase.com, the URL is coinbasedapp.net. In addition, some links on the site do not work.
“Most of these pig butcher websites just don’t have a lot of working links,” Frey said.
But as the US Secret Service warns, many sites do not have these red flags.
“Simex.IDN.com is an example,” he said. “There are sites like this with a very compelling product, working links for you to buy, sell, crypto. But in reality, all the crypto you buy here goes straight to criminal organizations.”
following the money
Once the money is sent, it is difficult to get it back.
“If you contact us 30 days, a month later, it will be very difficult to trace and get the funds to a place where we can return them to the victim,” Bradstreet said.
According to the US Secret Service, most victims who report a crime within 48 hours have a greater than 75% chance that the federal government can seize their money. Whereas if it’s been more than 48 hours, the probability drops to less than 10%.
The impacts go beyond simple financial loss.
In R’s case, she fell into a deep depression. She not only lost her job just as she was about to retire, but in total she lost over $1.3 million.
“It’s very hard, very hard on my family,” R said. “Every morning I wake up feeling like it’s a nightmare.”
Crypto companies & LinkedIn responds
Cryptocurrency exchange platform Coinbase told ABC7 that they routinely block cryptocurrency addresses associated with scams and perform blockchain analysis on fraudulent addresses. The company recently published a blog post on this topic.
“We are deeply sorry to hear from any customer who has been impacted by this scam and have invested significant resources to mitigate it. We will remain vigilant and do all we can to keep those who use Coinbase safe,” wrote the society. in a statement to ABC7. “Coinbase is working with industry partners to remove these sites and develop ways to warn users when they visit known fraudulent sites to help limit the damage caused by this type of scam. Coinbase is educating its users on how to identify signs of a potential scam.”
The company advises taking the following security measures to defend your assets:
- Beware of investments that claim a guaranteed return
Crypto exchange and bank Kraken told ABC7 that most of the scams that target the company and its users rely on fake websites and apps created by scammers.
“We proactively identify these counterfeits and work aggressively to remove them. We also provide an extensive library of guides on our support page to help crypto users identify common signs of scams and protect their funds. “, the company wrote in a press release.
“We enforce our policies, which are very clear: fraudulent activity, including financial scams, is not allowed on LinkedIn. We work every day to keep our members safe, and that includes investing in automated defenses and manual to detect and deal with fake accounts and suspected fraud. You can learn more about the work we do to keep members safe. here“, wrote the company ABC7.
If you are on the ABC7 News app, click here to watch live
Copyright © 2022 KGO-TV. All rights reserved.