IRS Warns of "Pig Butchering" Schemes 

The IRS is warning customers about scams using false online dating accounts that are used to deceive people into making fraudulent Bitcoin investments. These fraudulent activities are increasing worldwide, with American individuals often being targeted.  The IRS Criminal Investigation division describes pig butchering as a disturbing financial exploitation tactic exploiting vulnerable people seeking connection.

In these schemes, strangers cultivate relationships through dating sites or social media, building affection and trust. Eventually, the scammer urges their target to invest in a cryptocurrency platform they tout, promising huge returns. But the entire operation is fabricated to steal funds, leaving victims penniless.

According to IRS agents, the average amount lost in pig butchering scams is over $100,000, and in some cases, people have lost all of their savings. The emotional destruction is equivalent to the financial ruin. However, the strategies continue to change, requiring greater watchfulness.

“Cryptocurrency scammers have become very sophisticated,” said IRS CI Chief Jim Lee, citing pig butchering as a prime example. This International Fraud Awareness Week, he urges citizens not to keep investing in fraudulent crypto pitches, no matter the promised payout. "It's unfortunate to witness individuals losing their savings in this manner," he expressed.

Pig slaughtering scams usually start when an unfamiliar person contacts the target via a dating application or website. Frequently, scammers assert that they reside abroad, avoiding a face-to-face encounter. After building rapport and passion, the scammer suggests investing in a cryptocurrency platform they can access. This exclusive opportunity is portrayed as low-risk with guaranteed massive returns. But the entire scheme is fabricated to siphon away funds.

Once larger investments occur, victims cannot withdraw money, encountering endless technical glitches on the fake platform. Eventually contact ceases altogether. The U.S. Federal Trade Commission states median individual losses from romance scams hit $10,000 in 2021. Pig butchering cryptoschemes often extract much more given thefalse promise of huge crypto gains.

Warning Signs of Pig Butchering

The IRS reminds citizens that legitimate investments do not guarantee returns. If an online romantic partner presses you to put money into crypto, exercise extreme caution. Other red flags include:

• Sudden contact from strangers or old connections urging crypto investments
• Typos or misnamed companies - a tactic known as “typo-squatting”
• Requests to transfer money through untraceable means
• Communications shifting to other apps during investment talks
• Claims of exclusive access to high-yield crypto platforms

If propositioned, cut off contact. Verify a suspicious suitor's identity through video chats or in-person meetings before engaging further. Any refusal to prove their identity should end the relationship. Seek help if already exploited; recovery of funds is difficult but authorities may trace criminals.

The IRS understandably finds pig butchering schemes appalling, given the devastating emotional and financial toll on unsuspecting victims. While fraudsters know no borders, U.S. citizens are frequent targets.

To avoid heartbreak, apply healthy skepticism before trusting online relationships, especially those pressing for money. Conduct thorough background checks on prospects who propose questionable investments. Refuse wire transfers to dubious accounts.

Above all, make sure to never invest an amount that you cannot afford to lose entirely. Cryptocurrency remains highly volatile and lacks FDIC protections. If experiencing pig butchering signs, cease contact and alert authorities.

Sadly, trauma from financial abuse can equal monetary damage, destroying confidence and security. Seek professional help and lean on trusted friends as needed. And know that eventually, time helps heal wounds, even if money remains lost.