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Known as “Sha Zhu Pan” – this scam involves cryptocurrency, or digital currency that’s exchanged through a computer network and not through a financial institution like a bank.

This type of scam is a type of investment fraud that lures individuals into investing their money in seemingly legitimate and profitable ventures. Typically, the scammers promise high investment returns within a short period.

Scammers often use fake images and impressive yet fraudulent investment portfolios to convince victims of the legitimacy of their schemes. Once victims are hooked and have invested a significant amount of money, the scammers suddenly disappear, leaving victims with no way to recover their funds.

According to Finra.org – This scam is also known as “pig butchering” .  It derived from the idea that the scammers fatten up their victims with the promise of lucrative returns before “slaughtering” them for their money.

The scam often begins with a seemingly innocent chat initiated by a random person. The scammer might claim to have received the victim’s number from a mutual friend, while also appearing unsure if they have the correct number. However, this is just an act to engage the victim in conversation. Scammers have also been known to use images of attractive women to lure victims, preying on their desire for companionship or romance to build trust and establish a connection.

Like many other types of investment fraud, follow a series of steps that are designed to manipulate and deceive victims. The scammers prey on the victims’ desire for financial success and exploit their trust to carry out their nefarious schemes. The following sequence of phases outlines the common progression of how scammers carry out this scheme:

  • Gaining a victim’s trust. The scammers initially develop the trust of their victims by presenting themselves as knowledgeable professionals or seasoned investors. They also use social media platforms or online forums to engage with potential victims and create an illusion of credibility and success. They also employ another unique tactic: adding a layer of romance or companionship to their scam. This means that they exploit not only their victims’ desire for financial success but also their innate need for connection and intimacy.
  • Pitching the investment. Once trust is established, the scammers introduce a promising investment opportunity. This could involve stocks, cryptocurrencies, or other financial instruments. The scammers typically use persuasive language, manipulate numbers, and employ a sense of urgency to convince victims that the opportunity is too good to pass up.
  • Collecting money. After persuading the victim to invest, the scammers collect the funds, often using digital payment platforms or cryptocurrencies to make tracking more difficult.
  • Disappearing completely. Once they have received a substantial sum from their victims, or once the victims try to withdraw funds from the account, the scammers will suddenly become unreachable, or the brokerage platform will have trouble transferring funds. Scammers could also delete their online presence or create new identities, making it difficult for victims to recover their lost funds.

Each step is designed to draw victims further into the scammers’ web of lies. As the victims become more invested both emotionally and financially, it becomes increasingly difficult for them to recognize the scam for what it is and remove themselves from the situation.

Watch for Warning Signs

To avoid becoming a victim of this type of scam, watch for these red flags and know how to protect yourself:

  • Unexpected contact: Never respond to unsolicited messages from unknown contacts, even about seemingly benign topics, especially via text message and on encrypted messaging applications.
  • Refusal to participate in video chats: If someone you’ve been messaging with consistently declines to interact face-to-face, they likely aren’t the person from the profile photo.
  • Request for financial information: Don’t share any personal financial information with individuals you’ve never met in person. If a new virtual friend or romantic connection starts making financial inquiries, put the brakes on the relationship.
  • Invitation to invest in specific financial products: Be wary of any unsolicited investment advice or tips, particularly from someone you’ve only spoken to online and even if they suggest you trade through your own account. Always question what a source has to gain from sharing tips with you and whether the transaction fits with your financial goals and investment strategy.
  • Unknown or confusing investment opportunity: Carefully evaluate the product, as well as the person and/or company requesting your investment. Along with a basic search, try adding words like “scam” or “fraud” to see what results come up. Consider running recommendations by a third party or an investment professional who has no stake in the investment, and use FINRA BrokerCheck to see if the promoter is a registered investment professional.
  • Unfamiliar trading platforms: Do extensive research before moving any money, particularly in an emerging market like cryptocurrency, which has hundreds of exchanges and new avenues for trading continuing to evolve. Who controls the platform? What security measures are in place? How can you withdraw funds if needed? If you don’t know the answers to those questions, don’t put your assets there.
  • Exaggerated claims and elevated emotions: Take a closer look at any investment that offers much higher than average returns or is touted as “guaranteed.” Fraudsters will also often use their knowledge about you to appeal to your emotions—something like, “Don’t you want to have money to send your kids to college?”
  • Sense of urgency about an upcoming news announcement or share price increase: Remember that insider trading is illegal, and you should never trade in shares of a company on the basis of material, nonpublic information.

Learn more about how to protect your money from fraud and get more insight from the FBI and the Financial Crimes Enforcement Network (FinCEN) involving cryptocurrency scams.

If you think you’ve been a victim of this type of scam, you can:
1) submit a regulatory tip to FINRA.
2) file a report with the FBI’s Internet Crime Complaint Center
3) Let us help you.  – contact us at “TheTek-Support” or call us at:  919.582.6212, we are here to help.