Many Americans and Latin Americans are losing their life savings to cryptocurrency fraud.
"Pig slaughter" scams got their name from the idea that scammers "fatten" victims by generating trust, and the strategy has amassed billions of dollars in stolen funds, especially in the form of cryptocurrency.
Losses from investment scams soared 38% to a new record in 2023, according to the FBI’s Internet Crime Report. Of the $4.57 billion in funds reported stolen, $3.96 billion was related to fraudulent cryptocurrency investments.
So why are these scams so successful and what are law enforcement doing about it?
Here are some guidelines to help you recognize when you are being offered a cryptocurrency scam:
Ponzi-type structures: If the offering involves recruiting others to make a profit, it may be a Ponzi-type scam. These schemes require you to continue recruiting new people to pay off previous investors.
Promises of high guaranteed returns: If someone promises extraordinary or guaranteed returns without risk, this is a warning sign. Cryptocurrencies are volatile and there are no guarantees of profits.
Pressure to act quickly: Scams often pressure people into making hasty decisions. If you are being urged to invest quickly without giving you time to do research, be wary.
Lack of transparency: Always research the project or offer. Scams are often opaque about who is behind the project, their team, and their credentials. Make sure there is verifiable and transparent information.
Social media promotion and unsolicited messages: Investment offers that come through unsolicited messages, social media or emails can be scams. Always verify the legitimacy of the offer.
Request for personal or financial information: Do not share personal or financial information or account access data without being absolutely sure of the legitimacy of the entity you are dealing with.
Unverified websites and platforms: Make sure you use cryptocurrency exchanges and wallets that are well-established and recognized. Verify URLs and check out reviews from other users.
Grammar and spelling errors: Scam websites often have spelling errors, which can be a sign that they are unprofessional.
Lack of customer support: Legitimate companies offer adequate customer support. If you can't easily contact the company or if there's no response to your queries, that's a red flag.
Audits and Reviews: Serious projects often undergo external audits and have independent reviews. Check to see if the project has security audits performed by recognized entities.
Always do your research before making any investment and if something seems too good to be true, it probably is and is a scam disguised as great returns.