As the head of intelligence and investigations at the largest crypto exchange, Erin Fracolli’s number one goal is to keep users safe, but there’s a growing scam taking place online in which victims are being romanced into investing in fake cryptocurrency.
"We've been working with law enforcement on investigations into these crimes and we're also pioneering a new program with the Hong Kong police specifically to address scams targeting victims,” said Fracolli, head of intelligence and investigations with Binance.com. “We're really focusing on user education to make people more aware that these are happening. It's a huge issue.”
In 2022, about 34% of reported dollar losses in romance scams occurred with crypto, according to the Federal Trade Commission (FTC).
Known as pig-butchering, the scammer convinces the victim to invest in cryptocurrency using fake websites that appear authentic but are controlled by the scammer. After the victim invests in crypto on the fake website, they are unable to redeem their investment and the con artist disappears.
“People get approached on dating apps or via WhatsApp and Facebook,” Fracolli told the Globe Banner. “The scammer strikes up a relationship with the victim but it can be weeks or months before they even mention investment and it's always in an indirect way. Usually they don't just go right into it, which allows them to build up trust with the victim.”
To avoid being pig-butchered, Fracolli advises never to invest in cryptocurrency on platforms that don't have a large, high-profile user base, such as Binance.
“Be careful,” Fracolli said in an interview. “Do your research on the platform. Don't take advice from people you haven't met in person. There's a fear of missing out on the next big thing, especially with cryptocurrency but people need to slow down, do their research and really understand what they're investing in.”
Kickboxer and social media influencer Andrew Tate currently sits in jail in Romania, accused of using the "lover boy method" to entice young women online into webcam sex work.
Like pig butchering, the lover boy method involves romancing people over a lengthy period of time to dupe them into sex work, as opposed to direct payments of cash.
As previously reported in Decrypt, Romanian police have seized $467,625 worth of Bitcoin from Tate and his brother Tristan Tate as part of their investigation into their alleged internet pimping scheme.
“His case hasn't been resolved yet," Fracolli said. "But I think we have really great relationships with law enforcement in Europe. As time goes on, we’re seeing law enforcement becoming much more familiar with cryptocurrency in cases that maybe previously they wouldn't really have been aware to even look for someone’s cryptocurrency.”