A scam that supposedly originated in China in 2019, that targets potential crypto investors often by luring them using romance or friendship, is gaining new victims in India. On May 1, a 35-year-old businessman in Chennai reported a loss of Rs 10 lakh to this scam. In April, a business person from Chhattisgarh reported to the police that he had lost Rs 80 lakh to the scam, named Sha Zu Pan, or ‘Pig Butchering’ in Chinese.
Reports explain that the significance of the name “Pig butchering” lies in the scammers’ modus operandi. As a butcher would fatten up a pig before slaughter, the online scammers – mostly Chinese women and men – make their victims invest in a fake digital coin, on the promise of rich rewards, before blocking their access to the money and wiping the account clean.
TNM spoke to Ashish, the Chennai-based businessman who lost Rs 10 lakh to the scam on May 1. Ashish believes that this scam is an organised investment fraud”, with the scammers trained in psychological manipulation.
The scammers, typicallyChinese women and men, contact the victim through social media , mostly Twitter or Facebook, and sometimes through WhatsApp. According to Ashish, the scammers never make a straightforward request for money, but direct the victims to fraudulent websites or mobile apps through links, and convince them to create accounts where “they can put their money”, on the promise of a rich return on investment.
This is what happened to Ashish*., who was contacted through Twitter Direct Messages by a ‘London based, Hong-Kong native who went by the name Nancy’ in the third week of April.
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Twitter messages exchanged between Ashish and Nancy.
“As I run an event management company, I Interact with a lot of Chinese salespersons to purchase merchandise for events. So I did not find her messages suspicious. Over the next two weeks, we messaged each other daily. I told her that I was married and had a child, and she kept the conversation very professional, stressing on family life and values. Through our conversations, she won my trust and confidence,” Ashish explains.
One week later, Nancy asked Ashish if he had invested in crypto. When he said he had put in only a very small amount, she directed the conversation to crypto investments, Ashish recalls. “She told me how she made money after she moved to London, by investing in Bitcoin when it crashed in 2020. She seemed to have vast knowledge about crypto and as an enthusiast, I began to listen and believe her when she spoke about the industry. She then told me about a “new coin” she had invested in, which was in its pre-Initial Public Offering (IPO) stages and which promised to really rise in value,” Ashish explained.
Ashish recalls that Nancy created an aura of exclusivity around this new coin called ‘Wind Power Energy (WPE)’, by saying that it could be purchased only “via invite” as it was not yet open to the public.
“She would send me special codes to invest in WPE as it would go public only in the start of July and ask me to not share the codes with anyone else, as this would lead to more people purchasing the coin and my share of profit reducing. She told me that my investment would multiply 100x when the coin went public. She even gave me anecdotes from her investment or from her friends’ investments, with graphs showing how her ‘investment’ had risen. She also gave me insider information on the coins.
Ashish later learnt that the coin and the crypto exchange site he used to buy the coin was fake, but not before he lost 12,000 dollars that he had ‘invested’ in WPE.
“I was led to believe that my investment would multiply several times once the coin went public. Nancy, the scammer, gave me anecdotal evidence with visual proof showing how her ‘investment’ had multiplied. She also gave me insider information on the WPE. When I asked her how she knew, she told me that she had close sources who knew the workings of WPE.The narrative was so foolproof and I was sold,” Ashish tells TNM. Apart from the narrative, the website used to execute the scam too was perfect, Ashish says.
Nancy shared the link to the exchange site called ‘Letraders.org’ – a fake site – through which Ashish purchased WPE. The platform ‘Letraders.org’ when compared with legitimate crypto exchange sites like Binance gives the look and feel of a credible website with features including options to buy and sell crypto, derivatives, finance and NFTs. It also includes a “markets option” listing the live prices of hundreds of crypto coins including Bitcoin, Altcoin, Ethereum etc.
“Letraders.org lists all the major coins including Ethereum, Alt Coins, Doge Coins, Bitcoin etc. It has options to buy them too and tracks their live prices. To me LeTraders.org looked very legitimate,” he explains.
A screenshot of Letraders.org with live prices of crypto coins.
Initially, Ashish transferred a sum of 1,000 dollars from his Binance wallet, to the Letraders.org wallet to buy WPEs. He even tried to sell the coins and withdraw hundred dollars from the Letraders.org wallet, which he could do initially. When he saw the value increase everyday, Ashish says he invested more into WPE, and got his brothers and wife to invest too.
On April 30, when Ashish suspected fraud and sold his WPE to try to withdraw the entire amount, he was barred from doing so citing pre-IPO restriction. He then tried contacting Nancy, who by then, had blocked him on Twitter and WhatsApp, where they used to chat.
Ashish says that he realised he was cheated and filed a police complaint, but for others who don’t, the scam runs deeper. “When they wait for the date the coin is supposed to go public, and then withdraw the sum, the website says that the site was breached by government agencies, and that the investor has to pay 30% of his earnings as tax. When the victim transfers more money, his account is frozen and he is blocked from accessing it,” Ashish says. These details about the scam are merely accounts, and are pending verification.
Within the past few weeks, several complaints of similar scams have been registered with the police. In April 2022, a Chhatisgarh businessman lost Rs 81 lakh after a Hong Kong-based woman convinced him to invest in a crypto coin with the promise of 3 times return on investment.
Ashish says that he got in touch with the commissioner of police who directed him to file a complaint with the local police. TNM has seen the copy of a complaint that he had submitted to the police station.
“This is just another version of online cheating using a different modus operandi. The scammers change their strategy depending on the current trends. Right now everyone is investing in crypto and hence they have targeted this digital asset to defraud people. Crypto is an unregulated market and hence people should not rush into buying coins. So far we have received three to five complaints of a similar scam in Tamil Nadu. We will be following the same set of guidelines and procedures used to investigate online cheating cases,” a senior cop investigating the case told TNM.
Being a relatively new and growing technology development, the digital assets industry faces regulatory concerns and therefore is currently prone to several investment frauds. There are several ways to invest in crypto safely, according to experts.
The first point is to do your own research and understand how return on crypto investments work. It is never a quick and easy way to multiply your assets, and anyone who promises to take your money and multiply should be eyed with suspicion, experts say.
While making friends or talking to people online, exercise caution. Do not give away information (personal or financial) easily.
An extension of the first point, investors and potential investors should be wary of online ads that say “low investment and huge returns” on crypto or “steady earnings without losses”. Crypto is a volatile industry and prices are bound to drop and rise sharply.
Do not let anybody else handle your money. Do not transfer money to accounts, whose holders promise to multiply your wealth. Be in control of all your assets, especially digital assets and do not delegate this job to another person.
Invest only through well known and credit worthy platforms such as Binance and CoinBase. Most of these fake crypto exchange sites will be well designed and look legitimate, barring minor differences such as the URL spelling. This is helpful to avoid phishing websites that imitate well known online exchange platforms.
Do not click any links sent by people you do not personally know, online.
Try to get as much information about the scammer’s identity, location etc as possible if he/ she contacts you. After that report to the police.