Valentine's Day Crypto Scams: Protecting Your Heart and Wallet

It’s Valentine’s Day and love can be confusing and complicated at times.  “What’s Love Got to Do with It”   a popular song for Valentine’s Day was The Queen of Rock and Roll Tina Turner’s career come back song at aged 44 after she broke off from her musical duo act with her ex-husband Ike Turner.   The song became Tina’s first and only Billboard Hot 100 number-one single that was minted in to a NFT.

Valentine’s Day: What’s Love and the Promise of Greater Crypto Returns Got To Do With It?

Romance and digital assets have been crossing paths in other ways too according to the  US state cybercrime unit;  the US Federal Bureau of Investigations (FBI)  ic3.gov; the  Europol and the INTERPOL which continually receive complaints concerning digital asset-laced cyber romance crime cases.

Ahead of Valentine’s Day, the FBI issued a  warning for people to be on the lookout for a growing scam with a bloody name “Sha Zhu Pan (???)” a Chinese phrase that loosely translates to “pig butchering.”   “The victims in Pig Butchering schemes are referred to as ‘pigs’ by the scammers because the scammers will use elaborate storylines to ‘fatten up’ victims into believing they are in a romantic or otherwise close personal relationship,” according to an affidavit from a 2023 pig butchering arrest in Los Angeles, US. 

Once the victim places enough trust in the scammer, the scammer brings the victim to invest their money into a crypto investment scheme that first produces a high investment return and then loses all of the victim’s money. Pig butchering poses a significant, worldwide threat with victims suffering devastating financial losses, some losing their life savings.

The US Treasury Department administrators the Internal Revenue Service ( IRS )  and the Financial Crimes Enforcement Network (FinCEN) also issued alerts about “pig butchering” cryptocurrency scams which are linked to fraud and certain types of cybercrime, that are two of FinCEN’s Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) National Priorities, where victims in the United States have lost billions of dollars according to a  United Nations report.

“Cryptocurrency scammers have become more sophisticated with their schemes,” said IRS CI Chief Jim Lee. “It’s a shame to watch people hopelessly invest their savings in crypto and earn returns on their deposits – to never see the money again. We don’t want additional victims to get butchered.”

The 2023 Annual Report of IRS-CI indicates that the use of professional money laundering or third-party money launderers has expanded with technology. Third-party facilitators place illicit proceeds into businesses, financial institutions, brokerage firms, and physical assets to conceal the nature of the illicit profits. In December 2023, Ian Freeman was convicted of a $10 million bitcoin money laundering scheme involving proceeds from romance scams and other internet fraud by exchanging U.S. dollars for bitcoin.

In January 2024 Richard Fasanella and his associates were convicted of using various online scams, including romance scams, to defraud dozens of primarily elderly victims of millions of dollars.   “It is alleged that Mr. Fasanella orchestrated brazen schemes of staggering proportions,” said IRS-CI Acting Special Agent in Charge David Meisenheimer.  “His arrest is another example of IRS Criminal Investigation and our law enforcement partners’ commitment to investigate and prosecute those who take advantage of taxpayers for their financial gain.”

At the end of 2023, the INTERPOL took down a transnational cybercrime operation involved in romance scams, investment fraud, money laundering, and other cybercrimes after law enforcement agencies from 34 countries coordinated nearly 3,500 arrests and seized about $300 million in stolen funds as part of Operation HAECHI IV.  “The seizure of $300 million represents a staggering sum and clearly illustrates the incentive behind today’s explosive growth of transnational organized crime,” said Stephen Kavanagh, Interpol’s Executive Director of Police Services.

“HAECHI IV’s 200 percent surge in arrests shows the persistent challenge of cyber-enabled crime, reminding us to stay alert and keep refining our tactics against online fraud, which is why INTERPOL operations like this are so important. Thank you to all concerned, especially colleagues from the Philippines and Korea” he added.

A Pig Butchering Story of a Filipino Man in New Zealand

A crypto-scammed, broken-hearted Filipino man who lived as an immigrant in New Zealand wrote his unfortunate story in a Reddit post.   “I matched with a girl on [dating app] Hinge, and as we talked every day, I started trusting her. It’s my first time using a dating app, and she’s the first match, making it easier to trust her since we’re both Filipino. We had nightly calls, and she even sent me a singing voice message [What’s Love Got To Do With It?]. However, when I suggested a video call, she always postponed, saying the right time would come.

Things took a turn when she sent a nude video without showing her face. Despite the anonymity, I trusted her. She then introduced me to crypto trading using intradee.com, guiding me through my first NZD 100 investment, which gained NZD 36 [36% investment return]. Encouraged, I invested more, but trouble arose when my account froze upon depositing a larger sum.

They demanded three fees to unfreeze it and having invested all my money, I couldn’t pay. She offered to help with $560 USDT [USDT got banned in China at the end of 2023], but I suspect it’s part of the scam.

Concerned, I discovered she was impersonating a model by searching her profile image. When I confronted her, she unfollowed me. Now, I’m stuck with the last withdrawal fee. I’ve lost my entire savings of 17k NZD to this scam. Feeling incredibly foolish, I even delayed paying rent to cover the fee. I don’t know how to admit I got scammed to my parents. Please, I need help deciding whether to finish the payment or let it go.”

How to Report Pig Butchering Scams

If you or someone you know is a victim of a pig butchering scam, first softly sing to your scammer [What’s Love Got to Do With It] then promptly report it to the  US state cybercrime unit;  the  ic3.gov; the  Europol, and the INTERPOL.

Please reference “Pig Butchering” and include as much information as possible in the complaint including names of crypto exchanges/ platforms, cryptocurrency addresses and transaction hashes, bank account information, and names and contact information of suspected scammers.

Maintain copies of all communications with scammers and records of financial transactions. .

This Valentine’s Day some good news comes from Chainalysis which reports in its “2024 Crypto Crime Trends: [that] Illicit Activity [is] Down as Scamming and Stolen Funds Fall, But Ransomware and Darknet Markets See Growth.”

Happy Valentine’s Day!

- Selva Ozelli Esq, CPA, is the Author of Sustainably Investing in Digital Assets Globally.