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Earlier this year, a money-making opportunity popped up on my phone. I had been added to a cacophonous chat group populated by dozens of wealthy investors. For weeks, I watched them share photos of steak dinners and vacation homes, while offering their buy and sell positions, their gains and losses. Keita, a guy with a number in northern Florida, complained about having to hire laborers to clean up his yard. Anthony from New York posted while reading a bedtime story to his kids. Jefferson Ogwa talked about smart trading.
The smartest trades of all came from one Mike Wilson, who, with the help of his Morgan Stanley assistant, put order recommendations into the chat. When he did, people flooded the group with screenshots of their Wilson-directed gains and occasionally posted their Wilson-advised losses. Wilson’s assistant helped people place their trades, encouraging them to hold steady during the inevitable market swings. “The starting capital is relatively small for those who want to participate,” she wrote. “Stay tuned.”
I stayed tuned. Not having made any trades—as a journalist, I don’t actively invest in anything—I nevertheless added, “I can’t wait for the markets to open on Monday.” At that point, I was added to other trading groups, and my phone started ringing with texts on iMessage and WhatsApp. “This is Marie, do you have time to talk today?” “Are you interested?” From there, it escalated slowly, slowly. Would I like to chat? What were my investment goals? How was my week? Was there anything I was looking forward to?
I found myself entangled in a typical pig-killing scam, whose hallmark, beyond its horrifying name, is a certain laid-back charm. No rush. No direct requests for money. Just a lot of engaging, harmless messages leading, inexorably, to an attempt to get me to start trading bitcoins on a dedicated platform or sending them to an anonymous address.
It was obvious to me from the start. I had been randomly (?) added to a Morgan Stanley-affiliated (?) WhatsApp-based (?) investor group filled with hundreds of people posting in starchy English about eating “salmon fruit salad” (?) and “spaghetti and mashed potatoes” (you know what, of course) while trading bitcoin (come on!). The precision of everyone’s punctuation, the Juche-style praise for Mike Wilson’s greatness, the boasting about steady gains from the world’s most notoriously volatile asset… it was all too bizarre.
But I can easily imagine how someone who doesn’t know much about bitcoin or scams could fall for it. So much time was invested in making me feel comfortable, part of a special community. I found myself genuinely looking forward to reading the evening chat: Jason Dunlavey chatting about his Nepalese knives, Jody Mierop having brunch at Sarabeth’s. “I went to sleep and hoped to wake up feeling refreshed,” Lopez said. “I was already picturing myself hiding under the covers and everything was nice and warm,” Kevin Davis added. “Sleep tight and don’t let the bedbugs bite you!” Ahmet Kayci added. Thanks, internet stranger!
Moreover, the scam had some plausibility. Mike Wilson is really an investor. A famous investor. He is the chief investment officer of Morgan Stanley. The name of his assistant in the chat group is the name of a real Morgan Stanley employee, easily found on LinkedIn, although the person’s real job is in internal operations. A Morgan Stanley spokesperson confirmed that neither of them had texted me: Morgan Stanley does not offer direct bitcoin trading and does not advise clients via WhatsApp.
In addition to the real, realistic people who appeared to be participating, the bitcoin prices displayed in the group chat were up-to-date, and the order forms looked convincing and professional. For weeks, no one asked me for anything. It was sometimes hard to tell what anyone wanted, much less how they were going to get it.
Yet I was being fattened like a pig for the slaughter, as were millions of Americans. The FBI reports that cyber investment scams cost Americans $4.6 billion in 2023, a 38% increase from the previous year and a 1,700% increase from the previous five years. That’s more than ransomware scams, fake tech support scams, web extortion schemes, phishing attacks, malware breaches, and non-payment and non-delivery fraud combined. And that’s an underestimate, given that it only includes complaints filed with law enforcement; most people don’t bother filing a police report to try to get their bitcoin back, knowing that it’s hopeless. John M. Griffin and Kevin Mei of the University of Texas at Austin recently estimated that cryptocurrency scammers engaged in pig slaughter have raked in $75 billion since the start of 2020.
The problem has become so serious that the Federal Trade Commission this year issued a bulletin bluntly titled “What to Do If Your Online Partner Offers to Teach You How to Invest Your Money.” How did we get here? Gradually and then suddenly, like going bankrupt or falling in love. A confluence of financial and technological factors has made possible the explosion in pig slaughter. The question now is what can authorities do to protect the curious and lonely American public, hungry for companionship and hungry for money.
The rise of dating apps, social media platforms and instant messaging services is one of the biggest changes. Fraudsters pose as young women to lure bored older men, as college girls to tease college girls and as upstanding professionals to woo upstanding professionals. They tailor their messages to their intended audience, whether it’s being cute on Bumble or talking about work-life balance on LinkedIn.
Nothing new in this: romance scams have been around in one form or another since time immemorial. But sophisticated criminals have made them more convincing: They slow down the pace, offer to help people invest rather than ask for money directly. And social media has given them absurd scale and reach.
The biggest factor driving the rise of the pig-killing scam is the rise of cryptocurrencies, the $2 trillion speculative asset class and its associated money-transfer infrastructure. Bitcoin and similar cryptocurrencies aren’t exactly untraceable and anonymous. But cryptocurrency markets are lightly regulated; many companies operate offshore or flout the constraints of domestic law. Don’t take my word for it. Take the chief compliance officer of mega-exchange Binance, as quoted by Securities and Exchange Commission lawyers: “We operate like a fucking stock exchange without a license in the United States, buddy.” Once purchased, cryptocurrencies can be sent to anyone, anywhere, and are usually impossible to retrieve.
“You could go to Wells Fargo and say, ‘Hey, I need to send $200,000 to this bank account,’” Griffin told me. “Wells Fargo would run their anti-money laundering procedures on it. If it were a bank account in Thailand or Myanmar, it would probably raise red flags that there was suspicious activity. They might block that transfer or ask you a lot of questions.” Yet moving money from Wells Fargo to Coinbase to buy bitcoin wouldn’t set off such alarms. And at that point, Griffin said, “you’re just one transaction away from losing your funds.”
You might think the person extorting your funds is a hacker based in Malta or a creepy teenager obsessed with bitcoin. In fact, that person is probably a victim themselves. I had no way of tracing the scheme that targeted me. But the United Nations has warned that many of these pig butchers are forced into the practice by gangs. They are kidnapped and held in labor camps in Southeast Asia.
Since the start of the pandemic, criminal groups have been posting fake job offers on chat apps and elsewhere, luring multilingual and computer-savvy workers and ordering them to seduce and defraud foreigners, text message after text message. “Hundreds of thousands of people across the region and beyond have been forced into online crime,” according to a report by the UN Human Rights Office.
Investigative journalist Zeke Faux described this development in his book on cryptography, The number is increasingAfter being scammed out of $100 in Tether, a stablecoin, Faux traced the flow of money from these schemes to digital sweatshops in Cambodia and Vietnam. There, trafficking victims describe “abuse worse than I could have imagined,” he writes. “Workers who didn’t meet the scam quotas were assaulted, starved, forced to beat each other, or sold from one compound to another. One said he saw people force-fed methamphetamine to increase productivity. And several said they saw workers murdered, with the deaths being framed as suicides.”
This killing spree needs to stop, for the millions of victims who are being scammed and for the hundreds of thousands of victims who are being coerced into scamming them. Cryptocurrency companies need to be forced to act like other financial companies, complying with basic know-your-customer regulations and collecting tax data for authorities. Treating the problem as a large-scale money laundering, rather than a series of peer-to-peer scams, may be the best way to protect consumers.
In the meantime, the gentle, slow, and chatty methods of these thieves need to be made known, even if only marginally. The text messages of today’s Mike Wilsons are far more credible than the “Dear Sir/Madam” emails of the Nigerian princes of old. They are also far more entertaining. No one should be fooled. If you really want to invest in bitcoin, you’re better off doing it alone.
#Bitcoin #Scammers