The Department of Justice recently announced that it had seized $112 million in funds linked to cryptocurrency scams, including those known as “pig butchering.” These scams involve fraudsters, often posing as paramours, who con victims into sending significant amounts of cryptocurrency based on a false promise of return on investment.
The government’s cryptocurrency seizure was a win for law enforcement but just a drop in the bucket when it comes to the scale of Americans’ losses to these scams. The FBI’s Internet Crime Complaint Center found that losses to cryptocurrency investment scams reached $2.57 billion in 2022, nearly double the previous year. Those losses were in part driven by an increase in pig butchering scams. The reports even outpaced business email compromise schemes, which previously dominated fraud reports.
It’s not just federal law enforcement that’s on the case. The scams have provided a challenge for local law enforcement, many of which may have never dealt with cryptocurrency-related cases before. As a result, some have turned desperate victims away.
Santa Clara County Deputy District Attorney Erin West is seeking to change that dynamic. West, a six-year veteran of the state’s high-tech REACT (Regional Enforcement Allied Computer Team) cross-agency task force, has been an early adapter to taking down criminals meddling in cryptocurrency. She was behind the first major prosecution of a SIM-swapping case in the U.S. and has built a “Crypto Coalition” of 800 members of active law enforcement from local, state, federal and international partners sharing cryptocurrency crime-fighting techniques.
Now, West is hoping to bring that same attention and focus to pig butchering victims. “We’re seeing a lot of local law enforcement just say, ‘We don’t do crypto,'” West told CyberScoop. “And I don’t think that’s OK anymore. I don’t think it’s easy, but I think there are means to work together and to be available to victims.”
CyberScoop sat down with West after her talk at a recent conference hosted by Chainalysis, a company that provides cryptocurrency forensics services. This interview has been lightly edited for clarity and length.
What’s your reaction to the news that the Justice Department recently seized $112 million in funds stolen from victims of cryptocurrency scams?
I think it’s fantastic news for victims. It also shows that even though we don’t see what our federal partners are doing on a daily basis, they’re certainly working to address this problem. And it shows there is an opportunity for success in terms of seizure and getting money back. And I would encourage all of us to figure out ways to do it faster, bigger and more often.
You mentioned this time last year you were focused on SIM-swapping cases. When did you realize that pig butchering was going to be a big deal?
I think I first heard about it last summer. Our instinctive reaction is to make arrests. We had made arrests in international cases before in SIM-swapping so I looked into where these bad actors might be and what the circumstances were of these being international scams. And it became clear that this was happening in nations that would not likely cooperate with international law enforcement to help us make arrests. And when I realized that this scam was being fueled by human trafficking victims that were forced to commit scams — that the scammers were actually victims themselves — it became clear to me that this is a massive international human rights crisis.
The REACT task force had success with SIM-swapping cases and realized the capability of the task force to make big cases and to make international arrests. So when I heard about pig butchering, I didn’t shy away from the international aspect of it. I think the more I come to understand the gravity of what’s happening and the need for international coordination and collaboration on this, I couldn’t turn away.
You’ve shared stories from victims who are frustrated because they were turned away from law enforcement or told there was nothing they could do to help. What can local and federal law enforcement be doing better?
Local law enforcement has a duty to their victims to be able to hear and understand and investigate cases that come under their jurisdiction. We’re seeing a lot of local law enforcement just say “We don’t do crypto,” and I don’t think that’s OK anymore. I don’t think it’s easy, but I think there are means to work together and to be available to victims. I would love to see more collaboration between local, federal and industry. I think that’s really essential because we all have special skills. The way forward to really working on this massive problem is to work together.
You recently launched an initiative called “Operation Shamrock.” What is that?
I felt like there was an opportunity to really bring stakeholders from many different industries together to make an impact on how we could fight pig butchering, that it was not going to be solved by anyone alone, and that cooperation and collaboration were the only way to fight this. So, it was March and I thought about my trio of issues that I kept raising — educate, seize, disrupt —and it reminded me of a shamrock. The concept of the operation is to really create a community and I think that there’s an opportunity in this industry to build that community. Law enforcement didn’t need this kind of help when we were trying to seize cars or bust auto theft rings, but this is a whole different type of technology and involves so many different businesses that collaboration is really needed.
There used to be an attitude that recovering stolen cryptocurrency funds was impossible. Is that changing and, if so, why?
It’s getting easier because the exchanges have shown an interest in victim recovery and as evidence of that they’ve hired former law enforcement who are empathetic to victims and interested in running a clean exchange. Over the past year, we’ve seen exchanges that were not cooperative become cooperative [and] exchanges that were somewhat cooperative become very cooperative.
You’ve mentioned the need for social media companies, which are often the entry point for these scams, to get more involved. Can you talk about what companies should be bringing to the table?
I know that LinkedIn is working with some victim companies and they are working to remove scam profiles as soon as they are reported. I think that’s a great first step. Where I think specifically Meta, LinkedIn and Match can make a major difference is if they were to work on their back end to limit these scammers before they even get on the platform and to really look for ways to limit their access.
What services are there for victims, outside of law enforcement?
It was surprising to me but there are very specific groups who support victims in this situation. There’s one called the Society of Citizens Against Relationship Scams. It’s staffed by prior victims who offer support groups. There’s AARS, Advocating Against Romance Scammers.
Another thing that has surprised me is the willingness of prior victims to assist people who are still in the scams and don’t believe that it’s a scam. I had one victim reach out to someone who is currently in a scam and that person was like, “No, no, you’re the scammer.” [The former victim] was able to ultimately convince her by saying, “Look, I’ve walked your walk. I know what’s happening to you,” and got her out of that scam before she invested more money.