Surge in Pig Butchering Scams Costs Cryptocurrency Investors Billions in 2024

A recent report from onchain security firm Cyvers, which was shared exclusively with Cointelegraph, reveals that pig butchering scams have become one of the most significant threats to cryptocurrency investors, resulting in losses amounting to billions of dollars in 2024. The report identifies over 200,000 cases of these scams, which have collectively cost the industry more than $5.5 billion.

Understanding Pig Butchering Scams

Pig butchering is a sophisticated form of phishing scheme that involves prolonged and intricate manipulation tactics aimed at convincing investors to send their digital assets to fraudulent cryptocurrency addresses. Unlike traditional hacking incidents where unauthorized access is used to steal assets, pig butchering relies on psychological manipulation, essentially "grooming" victims to willingly part with their funds.

Michael Pearl, the Vice President of Go-To-Market Strategy at Cyvers, emphasized the complexity of distinguishing pig butchering from other kinds of investment scams. "Even though it’s important to highlight that, unlike hacks, it’s very hard to draw the line between pig butchering and investment scams. Ponzi, romance, it’s often a mix of all," Pearl explained. The defining characteristic of these schemes is the grooming phase that precedes the actual loss.

Grooming Time and Victim Statistics

According to the data from Cyvers, the average grooming period for victims spans from one to two weeks in approximately 35% of cases. Alarmingly, around 10% of scams can involve grooming periods of up to three months. This extended engagement is indicative of the manipulative tactics used by scammers, who create relationships that make victims more likely to trust them.

The impact of these scams has been profound, with reports indicating that 75% of victims lost over half of their net worth due to these schemes. Statistics reveal that males aged 30 to 49 are the most affected demographic, highlighting the need for increased awareness and education in this age group.

The Broader Impact on the Crypto Industry

The report details that the pig butchering schemes have notably affected centralized exchanges and other crypto platforms. Among the ten most impacted platforms identified by Cyvers, three are among the five largest centralized exchanges (CEXs), along with a crypto-friendly bank and an institutional trading platform. This phenomenon is not only damaging to individual investors but is also severely impacting the reputation and operational integrity of crypto platforms.

Deddy Lavid, co-founder and CEO of Cyvers, warned, “Crypto platforms—especially centralized exchanges—are hemorrhaging millions, grappling with reputational crises, struggling to maintain banking relationships, and increasingly facing regulatory scrutiny.” The ramifications have led to extensive concern among industry stakeholders regarding the long-term viability of these platforms.

December 2024: A Record Month for Losses

The escalation of pig butchering scams has been particularly pronounced, with December 2024 being noted as the worst month on record, resulting in more than $468 million in losses. This figure surpasses November’s losses of $424 million, indicating a troubling trend that shows no signs of abating.

Combating the Threat

As these scams continue to proliferate, efforts to combat them are increasing. The report mentions the development of industry-led initiatives along with government-driven regulatory actions. However, as generative artificial intelligence and AI-based chatbots become more sophisticated, they are also being exploited by scammers, allowing these phishing attacks to scale rapidly.

The continued threat of pig butchering scams underscores the need for ongoing vigilance within the cryptocurrency space. As the industry navigates this complex landscape, education, awareness, and regulatory measures will be crucial to safeguarding investors in the future.

As the cryptocurrency market evolves, both investors and platforms alike must remain alert to the tactics employed by scammers to maintain the integrity and trust essential for the growth of this digital asset ecosystem.