Everything You Need To Know To Investigate Romance Scams

Love and money – two of the most powerful motivators in human society. Put them together, and you have the perfect recipe for a new type of scam that’s leaving unsuspecting victims heartbroken and penniless. 

Picture this: you’ve finally met someone special on a dating app. They’re charming, attentive, and seem to be the perfect match. You’re swept off your feet, and before you know it, they start talking about a new investment opportunity that’s guaranteed to make you both rich. It sounds too good to be true, and unfortunately, it probably is. Welcome to the world of crypto romance scams, where heartbreak and financial ruin often go hand in hand.

Reports by the Federal Trade Commission’s (FTC) Consumer Sentinel Network (Sentinel) in 2022 classified as “Romance Scam” revealed that crypto romance scams are not a new phenomenon, and unfortunately, their prevalence has been increasing over the past few years. According to Sentinel, in 2019, losses totaled $493 million, while in 2020, that number jumped to $730 million. The following year, in 2021, reported losses reached a staggering $1.3 billion. The numbers have not improved in 2022, with the same amount of losses reported. 

Crypto romance scams are a dangerous form of online fraud that combines the emotional appeal of a romantic relationship with the allure of investing in cryptocurrencies. With devastating consequences for those who fall for them, these scams are on the rise and show no signs of slowing down.

Investigators can help protect the public from these terrible crimes by learning more about romance scams, such as the warning signs and how to look into them.

What are Cryptocurrency Romance Scams?

Crypto romance scams are sometimes referred to as “pig-butchering scams,” whereby the victims entrust the scammer with the biggest amount of money before the scam takes place, in the same manner a pig is fattened up before getting butchered.

Scammers often invest time and effort to understand their targets and develop a customized approach to swindle them, as is apparent from the high level of knowledge and awareness of some of the victims. Many of the targets are professionals with advanced degrees, including those working in fields such as medicine, accountancy and even law.

Romance scammers are skilled at manipulating their targets by closely observing the information they share and presenting themselves as the perfect match. They frequently tailor their responses, or more specifically their lies, to what the victim likes and desires, and they appear to be ready to settle down as well.

The primary goal is to build trust and a sense of intimacy with the victim, often by exchanging personal details and conversations over an extended period. 

Where Do Scammers Find Victims?

The use of dating apps has been on the rise for a while, and with the COVID-19 pandemic causing more social isolation, there has been an even greater increase in the number of people using these apps to seek out potential romantic partners. 

Regrettably, scammers have also taken notice of this trend and have been using dating apps as a means to identify and exploit their next targets. 

Crypto dating scams do not all start on dating apps, however. Reports show that romance scammers often target people on dating apps but frequently initiate contact through unexpected private messages on social media platforms. 

They use catfish scam profiles and a coy tone to start a conversation with their targets and quickly move the conversation to a different platform, such as WhatsApp, Google Chat or Telegram.

One scammer: “Sorry, I don’t think we know each other, I was kinda scrolling on my list and saw your number so I decided to text you. I think I accidentally saved the wrong number.”

Scammers invest effort in preparing their victims for the next stage of the scam, which is to persuade the victim to invest money.

How Do Scammers Steal The Money Of Their Victims?

In most cases, scammers do not directly ask their victims for money.

“Instead of asking for money upfront, these romance scammers take their time because it’s the relationship they cultivate with the victims that creates a false sense of security,” said Ohio’s Securities Commissioner Andrea Seidt.

Typically, they position themselves as trustworthy advisors who are knowledgeable about cryptocurrency and investment strategies, often showing screenshots of their own alleged cryptocurrency accounts and portfolios to boast of their financial prowess.

 

1. 1. The scammer convinces their target to download a cryptocurrency app, such as Coinbase, onto their phone and guides them through the process of making trades.

1. 1. The scammer recommends a wallet that is not regulated and asks their target to move their money into it, promising them big profits.

1. 1. The scammer shows screenshots of their own alleged cryptocurrency account and portfolio to convince their target.

1. 1. The scammer pressures their target to invest more and more money into cryptocurrency, offering up fake trading websites that mimic real ones to make the scam appear more legitimate.

1. 1. When the scammer believes the target has been invested enough, or when the victim has started to realize that they’re being scammed. The scammers request a large sum of money from them, usually using an excuse to help them withdraw their rewards.

Through these tactics, the scammer succeeds in “butchering” their victims and often disappears after receiving the payment, leaving their victim with a financial loss and a broken heart.

A woman named Sarrah Rose was targeted by a romance-oriented crypto scammer who pretended to be an Ivy League-educated Chinese national with a passion for trading cryptocurrency. In the beginning, the scammer wooed her with sweet words and flirtatious messages, but later tried to coerce her into investing in cryptocurrency through an unregulated wallet. The scammer even asked Rose to fork over $50,000 in cryptocurrency, and when she refused, he disappeared.

In essence, investigators need to remember that scammers refer their victims to legitimate service providers like crypto.com before defrauding them using phishing websites or directly asking for money.

Crypto Romance Scams in Organized Crime

Crypto dating scams are not only the work of individual criminals but are also perpetrated by organized cybercrime groups. These groups can offer an unprecedented level of scale and resources to their fraudulent activities, making them a major threat to individuals and organizations alike. 

These groups often use romance or “pig butchering” scams, and they often have access to large gray economies that give them the tools and resources they need to pull off these scams on a large scale.

Online marketplaces for stolen credit cards or fake identities, and scripts are some of the resources scammers use in their social engineering attacks on their victims. 

These criminal organizations can go after not only individual victims but also their employers or other organizations they are affiliated with, making the consequences of these scams far-reaching and potentially devastating to both the individual and the enterprise. 

Notably, the majority of victims in romance or pig butchering scams do not report their losses to authorities or employers due to fear or shame. Such scams not only result in significant financial losses for the individuals affected but also pose a significant financial risk to their organizations, particularly when they occur during business hours and on a device with access to business information.

Investigators need to understand the nature of these cybercrime organizations and the scale at which they operate. By understanding their tactics and using the right tools, investigators can more effectively investigate and prevent these types of scams and mitigate the risk to individuals and organizations alike.

Romance and pig butchering scams are prevalent, costly and often involve cryptocurrency. The techniques that scammers use to manipulate victims are advanced and prove successful at defrauding highly educated individuals.

How We Help

Blockchain Intelligence Group’s QLUE^TM helps investigators trace cryptocurrency transactions and visualize the flow of stolen funds to easily find leads, even at large-scale operations involving organized crime groups. Compliance, Risk, AML, independent and law enforcement investigators rely on our software toolkit to conduct crypto investigations, transaction monitoring, risk management, and due diligence. 

Learn how QLUE^TM can fuel your crypto crime investigations.