Pig Butchering Scam

May 23, 2024

GS Paper III Internal security

Context

Pig Butchering Scams, a type of online financial fraud, are on the rise worldwide, including in India.

Pig Butchering Scam

Origins: The term “pig butchering” refers to the scammers’ strategy of “fattening up” their victims by gradually building trust before “slaughtering” them and stealing their money.
- Pig butchering is a worldwide investment scam that originated in China and gained significant prominence during the pandemic.
Alternative Name: The “sha zhu pan” scam.
Fraud Type: An online investment scam where fraudsters create fake identities to deceive victims into investing in fraudulent schemes.

Methods involved In Pig Butchering Scam

Contact Tactics: The scam starts with the “host” reaching out to potential victims through social media, dating apps, or deceptive messages.
Establishing Fake Friendship: Once a target, referred to as the “pig,” is identified, the host establishes a fake friendship and encourages them to venture into cryptocurrency trading.
Deceptive Trading App: The host uses a fake trading app to trick the victim into thinking they are earning profits from fabricated trades.
Building Trust and Increasing Investments: As the victim’s trust deepens, the host convinces them to invest more money, a tactic known as “fattening the pig.”
Challenges in Fund Retrieval: When victims attempt to withdraw their funds, the fraudulent platform either offers excuses or imposes hefty fees, ultimately exposing the scam.
- Due to the characteristics of blockchain transactions, retrieving lost funds is exceedingly difficult.

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Blockchain Technology

Blockchains represent a novel secure data structure, reliant on cryptography and distributed across a network. This technology underpins cryptocurrencies like Bitcoin, facilitating the transfer of digital assets and data.

Decentralized Transaction: Spearheaded by Bitcoin, blockchains establish consensus among distributed nodes, enabling the transfer of digital goods without centralized transaction authorization.
Features of the Technology: Empowering simultaneous anonymity and security, peer-to-peer, instant, and frictionless transactions, this technology redistributes trust from centralized intermediaries to a vast global network.
- Through mass collaboration, sophisticated code, and cryptography, it establishes an immutable public ledger of all network transactions.
- A block represents the “current” segment of a blockchain, recording recent transactions, which, upon completion, becomes a permanent part of the blockchain database.
- With each block’s completion, a new block is created. These blocks are interconnected (forming a chain) in a linear, chronological order, with each block containing a hash of the preceding block.

Common victims of Pig Butchering scams

People facing loneliness or isolation
Individuals with limited financial literacy or investment experience
Those undergoing substantial life changes or emotional upheaval
Middle-aged and older individuals with substantial savings or retirement funds
Naturally trusting or empathetic individuals
Users frequenting platforms such as Telegram and Instagram
Homemakers and retired individuals seeking fast money opportunities

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