James invested millions in cryptocurrency; his “trusted advisor” took all his money

It all began with a friendly encounter with a stranger on a messaging app. To James, the person seemed genuine enough to engage in conversation. 

As the weeks passed by, he felt that the two had developed a bond of trust.

To James, Tomoko came across as relatable, just an ordinary person like himself. She would send him photos of meals she was eating, things she was doing and places she was travelling to.  

In time, Tomoko offered to introduce James to her a trusted investment advisor who had helped her make good profits in cryptocurrency investments.

The offer was tempting, and James invested his money without knowing that it was only a matter of time before things would blow up in his face. 

James soon realised that his trust had been gravely misplaced.

In reality, Tomoko was a person who had had her identity stolen. 

Scammers had trawled through her social media accounts and were using photos she had posted there to share with James. 

Tomoko’s information was used in this way to defraud hundreds of individuals out of millions of dollars.

This has resulted in her real name and likeness being posted on tens of scam-reporting websites and has caused her significant personal harm as a result.

Because the scammers used her real name and information, any cursory checks by the victim would’ve made her appear to be legitimate, there were no immediately visible red flags.

“Hey, I recently made $1,000 from this investment. I can show you how to do it, too.”

James is a victim of a pig butchering scam. Pig butchering scams are commonly operated by Chinese syndicates, the name of these scams is a grim analogy that describes the process of how victims are raised and fattened up over time, only to be slaughtered in the end. 

The criminals pretend to be ordinary people, starting an apparently harmless interaction that slowly develops into a friendship, eventually the scammer, at the right moment, introduces the victim to the idea of investing.

The way that this is presented to the victim is by way of an introduction to a trusted advisor who has helped the scammer make money in cryptocurrency investments. In reality, both the victim’s new-found friend and the “trusted advisor” are both members of the same criminal syndicate. In traditional sales parlance, the “friend” is the opener and the advisor comes in to close the deal.

Exploiting the personal relationship that has been developed, the fraudsters go to great lengths to position themselves as friends, capitalising on the victims’ curiosity over a new investment opportunity.

James was contacted by the perpetrators via WhatsApp, posing as a lone Japanese woman named Tomoko. The encounter began with an “accidental call” which the victim answered, apologised, and informed her that she might have dialled the wrong number. 

That turned out to be the hook for a long and manipulative conversation. 

From there, a friendly relationship developed — enough for the scammer to safely open up the suggestion of investing money in crypto.

Cryptocurrency has been a buzzword for some years now, with overnight success stories and digital wealth creation making news headlines. He was introduced to a cryptocurrency called MGC (Medical Growth Currency) only purchasable on anderFX.com, which turned out to be a fraudulent website.

Afterwards, the victim was directed to another fraudulent website called RistVersos, accessed via the MT4 (MetaTrader 4) interface on his mobile phone. 

MT4 is an app that is available for both iPhone and Android devices which provides legitimate information about the value of securities and cryptocurrencies. It has an interface hat enables brokers to connect their systems to it, this in turn enables people to view real-time information about the value of their investments in the app.

What is actually held in those accounts is information provided by the brokers holding them, in this case, the account that was connected had no real investments. The balances were falsified and the “deposits” had already been redirected to the scammers.

He bought USDT cryptocurrency from Coinspot and sent it to his investment advisor’s wallets, not knowling they were criminals, resulting in the theft of over AUD $1,100,000.

It’s not one-on-one, it’s one-against-many

While the victim thinks there are two people involved in this conversation with them (the friend and their trusted advisor), in reality, they are facing a panel of criminals, each discussing between themselves what and how to respond to the latest communication.

In this twisted game of deception, the odds are heavily stacked against the victims. What initially appears to be a personal interaction with scammers is, in reality, a well-orchestrated system involving multiple individuals working in tandem behind computer screens. 

These syndicates employ specialists, including psychologists, to craft strategies that build the victims’ confidence.

When James started to ask to withdraw his profits, the scammers fended him off by telling him that he had to pay more money for several reasons. These included tax purposes, administration fees, or to reach the minimum withdrawal amount — but all of it was contrived. 

There was not and nor was there ever any investment, nor were there any profits, it was all an illusion.

The criminal networks associated with the RistVersos syndicate operate with exceptional sophistication, often changing their website domains and network names to evade detection. 

While the call centres operated by these criminals are in Southeast Asia, their support infrastructure extends internationally, with syndicate members operating in the UK, Canada, and other countries. 

Hong Kong is one of the largest transit points for laundering money from these crimes. The authorities in Hong Kong take the SAR’s part in this activity seriously and often successfully execute arrests in the city.

In August 2022, the Hong Kong police arrested 283 people for laundering HKD$1.8 billion (USD$230 million) tied to pig butchering scams. Fast forward to January 2023 and Hong Kong Customs smashed the largest money-laundering syndicate ever discovered in the city. Nine people, including a local grandmother, were arrested and a scheme worth HK$6 billion was successfully dismantled.

Sometimes, the scammers are victims, too

A vital part of these scam networks is the call centres that operate from different parts of the world, particularly in Southeast Asian countries like Cambodia and Myanmar. The use of Voice Over IP (VOIP) softphones means that victims think they are calling numbers local to them. The phone numbers that divert to these call centres can appear to be in Auckland, Sydney, Montreal or Los Angeles (along with anywhere else in the world). 

This technology enables the scammers to lend further credibility to their operations as the victims assume they are dealing with someone in the same country as themselves.

Not all of the people operating within these call centres are doing so willingly.

According to a United Nations report in September 2023, at least 120,000 people in Myanmar and around 100,000 in Cambodia “may be held in situations where they are forced to carry out online [pig bitchering] scams.”

These people are recruited into sales jobs from other countries in Asia. They are promised lucrative salaries and the opportunity to earn high commissions. The rewards of these positions far outweigh what is available to them locally.

Upon arrival at their destination, their passports are confiscated and they are set to work in locked compounds. They are unable to leave the country and they are forced to work under threats of violent retribution should they not achieve their targets.

Much like many others ensnared in similar scams, James had no prior experience with cryptocurrency until the incident. His encounter with it is one that would be traumatising for anyone. The impact of falling victim to these scams goes far beyond financial loss. Perhaps even more catastrophic is the realisation that the fruits of years of work has been ruined with a simple click. 

This devastating blow leaves victims crushed and feeling powerless. Crimes like this can ruin families as well, which is humiliating for the victims and can cause them to become isolated and distrustful of the people around them.

The illusion of friendliness of Tomoko began to unravel. After he realised he had been defrauded, James took to the Australian police to report the crime. As is often the case with these types of multi-jurisdictional crimes, the police informed him his case was not pursuable. As only element of the crime that was within Australia’s borders was the victim, the proceeds of the crime and the criminals were not in Australia. 

“Sorry, there’s nothing we can do about it.”

Victims who report crimes like this to their local police get turned down due to a number of reasons, one of the biggest being the international nature of these scams.

In cases where the money has been transferred overseas, domestic police units lack the resources to pursue the matter. Cryptocurrency-related frauds also pose a challenge due to the limited understanding of this digital landscape among law enforcement agencies. 

The scale and nature of cryptocurrency and digital asset-related fraud take crime to new levels of complexity, this makes it difficult, if not impossible, for authorities to investigate them effectively.

The victims themselves struggle to provide concrete details about the crimes committed against them, as the fraudsters fabricate identities and locations. Consequently, these scams are often considered low-priority crimes, leading to a lack of necessary attention.

After a hopeless interaction with law enforcement, crime analysis and risk management firm Pacific Risk stepped in to assist James with his case. The firm is comprised of a group of professional analysts and advisors who specialise in investigating multi-jurisdictional crimes for both the public and private sectors. 

Unlike local law enforcement agencies, Pacific Risk has fewer constraints to initiate investigations on a global scale. 

Pacific Risk has the patience to carefully debrief the victim with dignity, in Pacific Risk’s experience many victims are often highly educated and professional, anybody can be deceived. Their international collaboration with law enforcement helps victims get complaints accepted by police forces in multiple countries. 

No amount of due diligence can remove all risk

The effectiveness of pig butchering scams is rooted in the multinational nature of the frauds. Additionally, scams involving cryptocurrency invoke a new high level of technological complexity to the fraud, that requires specialist training to understand. 

Front-line law enforcement who take the initial reports lack the required knowledge to have the reports properly investigated. As a result, instead of ending up on the desks of financial crime specialists within the force, they are often disregarded at the reporting stage.

With Pacific Risks’s assistance, James has been able to report the crime in Colorado and China where elements of the crime have occurred. The report prepared by Pacific Risk has enabled these law enforcement agencies to understand and take action on these crimes. The reports can also then be used by lawyers in civil litigation, to seek restitution from the money mules, and sometimes to invoke anti-fraud guarantees from intermediaries such as credit card companies.

Have you or someone you know fallen victim to a scam? Contact Pacific Risk to book a free, exploratory call so we can understand your situation and see if we can help.

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