Online fraud hits US banking system

With the development of digital technologies and artificial intelligence, internet fraud has reached unprecedented scales. According to various estimates, the annual revenue of cybercriminals exceeds 500 billion dollars, which is comparable to the turnover of the drug trade. 

One of the most common schemes has become "pig butchering" – a method in which the victim falls into a trap of prolonged deception, trusts the scammers, and ultimately loses all their money. In 2023, this type of fraud caused the bankruptcy of the American bank Heartland Tri-State Bank, when its head lost 50 million dollars.

How does the "pig butchering" scheme work?

The name of the scheme is related to the principle by which scammers "fatten up" the victim with trust before the final "slaughter" – the complete draining of accounts. The first cases of such fraud were recorded in China in 2018, but the pandemic gave the scam a new impetus. Criminals find victims through social networks, dating sites, or messengers, present themselves as successful entrepreneurs or attractive conversationalists, and build long-term relationships.

After several weeks or months of communication, scammers offer "profitable investments," most often related to cryptocurrencies. The victim makes initial small deposits and even receives returns, which strengthens trust. However, at later stages, the scheme stops working in reverse: money is withdrawn to the scammers' accounts, and contacts are suddenly cut off. Such scams are often directed at lonely elderly people or inexperienced investors.

Who stands behind the criminal industry?

One of the epicentres of global fraud is Southeast Asia. In Cambodia and Myanmar, entire scammer "farms" operate, where thousands of people are forced to work in fraudulent centres. According to UN data, in 2023, approximately 220,000 people became victims of forced labour in such "parks". They are lured by false job vacancies, deprived of their passports, and forced to deceive people around the world.

These centres are protected by armed guards, cameras, and high fences. They are often under the control of organised criminal groups, while local authorities turn a blind eye to what is happening, receiving economic benefit from it. In Cambodia, for example, fraud brings the country more than 12.5 billion dollars a year, which accounts for almost half of its GDP.

How did an experienced banker become a victim of the scam?

One of the most high-profile cases of "pig butchering" was the bankruptcy of Heartland Tri-State Bank in Kansas. Its head, Shane Hines, an experienced investor and former head of the state bankers' association, fell into the scammers' trap, losing not only personal savings but also 47 million dollars belonging to the bank.

It all started with communication with an "Australian investment consultant" on a messenger. Hines was offered a "profitable deal" on a fake crypto exchange. Over the course of six months, he transferred increasingly large sums to the scammers' accounts, hoping to recover his investments with profit. When the reality was revealed, it was already too late: the bank went bankrupt, and Hines himself ended up under investigation. As a result of the investigation, he was sentenced to 24 years in prison.

How not to become a victim of scammers?

The pig butchering scheme continues to develop, adapting to new conditions. To protect against such scams, it is important to:

• Not trust strangers on the internet who offer investment opportunities.

• Verify any financial offers and conduct independent audits of companies.

• Not transfer money to suspicious platforms and crypto wallets.

• Use two-factor authentication and other cybersecurity measures.

• Contact law enforcement agencies in case of suspicions.

Online fraud is not just a private problem, but a global threat that undermines the economy and financial stability.