The Alabama Securities Commission is warning consumers about a cryptocurrency scam that it says has already fleeced 88 victims, with an estimated loss of more than $22.5 million.
Called “pig butchering,” the fraud convinces a victim of big investment returns through unregistered securities and then lures them into sinking in more funds to acquire those returns.
“The scam is called pig butchering because the fraudster continually feeds you information as they fatten the victims with excitement and the promises of great investment returns,” ASC Director Amanda Senn said.
“The best way to protect yourself from this investment scam is to never give out personal or financial information to strangers, especially when they contact you first.”
As a result, the ASC has issued a cease-and-desist order against BATCIPE.VIP, BATCNAP.VIP, James Yeh and Kenju Go for offering unregistered securities.
Here’s how the scam works: The fraudster uses stock photos of an attractive person to entice potential investors.
Once the victim responds to the message, the con artist casually mentions their wealth and cryptocurrency. When the user takes an interest in crypto investing, the victim will be instructed to deposit funds, and falsified returns will be shown on their account.
When the victim attempts to withdraw their money, they are typically told to deposit additional funds or that they must pay certain taxes or fees. Once the “fees” are deposited, the funds and fraudster are gone.
An Alabama investor told the ASC that they purchased cryptocurrency from a registered exchange and then sent cryptocurrency to what they believed to be trading websites.
The transaction came after the investor was contacted through a dating website. After the conversation moved to WhatsApp, the investor was instructed to purchase cryptocurrency through a registered cryptocurrency exchange.
Then, according to the ASC, the investor sent cryptocurrency to what they believed to be a cryptocurrency trading website named BATCNAP.
The investor created what they believed to be a trading account for the platform. After depositing money into their account, the investor was allowed to withdraw a small amount from the unregistered platform, which was enough to make the investor trust it.
The BATCNAP platform soon became inoperable, and the investor was then directed to another unregistered cryptocurrency platform called BATCIPE.
The Alabama investor deposited more than $725,000 in about 34 days into the unregistered platforms and was provided account information showing that the account had grown to more than $7.5 million dollars.
The Alabama investor then attempted to make a larger withdrawal and was directed to customer service and was informed that they owed more than $775,000 in personal income tax, to be paid with additional cryptocurrency.
An ASC investigation determined that there were approximately 948 websites created by Yeh and Go.
For more information, call the ASC at 1-800-222-1253 and ask for the registration department to check out persons offering investment opportunities, investment advice for a fee and any products they offer.
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