U.S. authorities have charged four people with participating in a fraudulent cryptocurrency investment scheme that resulted in victims losing more than $80 million.
Zhang Lu, 36, of Alhambra, Calif.; Justin Walker, 31, of Cypress, Calif.; Joseph Wong, 32, of Rosemead, Calif.; 40-year-old of Naperville, Ill. Zhu Hailong, 40, was both charged in connection with a “pig-killing” scam in which targets were contacted through dating sites and social media.
Pig-killing scams are a common and rapidly growing type of fraud. Typically, scammers lure unwary victims into an online romance (often through dating sites, social media messages, or even initial contact disguised as a wrong number). Over time, trust is built and their targets are fattened, with scammers manipulating victims into investing in cryptocurrency platforms… believing they can make huge profits.
The truth, of course, is that the only ones who stand to make huge profits are the scammers themselves.
Victims send funds to “investment accounts” that are actually controlled by the scammers, and are initially falsely shown to be making significant financial gains, encouraging further investment. However, victims eventually discover that they are unable to withdraw their funds, which have been defrauded by scammers.
Sadly, victims of this type of scam will apply for a loan or dip into their own savings in order to send funds to a scammer who they sincerely believe to be a friend or romantic partner.
According to a U.S. Department of Justice press release, Zhang, Walker, Huang and Zhu conspired to open shell companies and bank accounts to launder the proceeds of cryptocurrency investment victims.
It is alleged that there were at least 284 transactions in total, resulting in victims losing more than $80 million, of which more than $20 million of victim funds were directly deposited into the bank accounts of shell companies set up by the defendants.
Therefore, if you find yourself in a digital romance with someone who recommends investing in cryptocurrency, or even suggests that you transfer funds to an account they control so that they can invest on your behalf, proceed with caution.
The U.S. Department of Justice recommends that if you believe you have been a victim of a hog slaughter scam, or if someone you know is a victim, please refer to the “Pig Slaughter Public Service Announcement” to report it to the FBI’s Internet Crime Complaint Center (IC3).
IC3 specifically wants to know the names of suspected investment platforms, cryptocurrency addresses and transaction hashes, bank account information, and the names and contact information of suspected scammers. We also urge you to keep copies of all communications with scammers and records of financial transactions.
Earlier this year, the FBI made the following recommendations:
- If you are contacted by an unknown person, do not disclose any financial or personally identifiable information (PII) and do not send money.
- Don’t invest based on the advice of someone you only know online.
- Confirm the validity of any investment opportunity or cryptocurrency investment website or application.
- If you have invested funds and believe you have been a victim of a scheme, do not pay any additional fees or taxes to withdraw your funds.
- Don’t pay for services that claim to recover lost funds.
Zhang Lu and Justin Walker appeared in court Wednesday and pleaded not guilty. The trial is scheduled to be held in Los Angeles on February 6, 2024. If convicted, they face up to 20 years in prison.
Joseph Wong and Hailong Zhu are currently wanted by federal authorities.
