February 24, 2024

IRS Criminal Investigation special agents have seen an uptick in a specific type of scheme that couples cryptocurrency with romance, and they have a message for taxpayers: Don’t get butchered.

The scam is known as “pig butchering”—flirtatious strangers use social media to lure unsuspecting romantic partners, who serve as the “pigs,” to invest in crypto trading platforms. When victims attempt to cash out, criminals seize their funds.

“Cryptocurrency scammers have become more sophisticated with their schemes. It’s a shame to watch people hopelessly invest their savings in crypto and earn returns on their deposits, to never see the money again,” IRS-CI Chief Jim Lee said in a statement.

IRS-CI investigators say U.S. taxpayers are currently the most targeted population for pig butchering schemes. So far, the highest identified loss in one of these schemes is $2 million, but average losses are in the hundreds of thousands of dollars. If you meet someone on a dating website or app and they urge you to invest in crypto, it is likely a scam, the IRS said.

Individuals should be aware of these red flags:

– A long-lost contact or stranger sends you a message on social media.
– You are urged to send money to an investment platform that is similar but does not match the platform’s official website address. This is called typo-squatting.
– You have an online romantic interest who asks you to send payment to them or an investment platform in exchange for a quick and lucrative return on your investment.

These schemes have resulted in significant losses for victims, with some losing millions of dollars. In one case, a Florida woman was sentenced to over 17 years in prison for orchestrating a $9 million construction employee scheme. She promised high returns on investments but instead used the money for personal expenses.

In another case, the Hyderabad police apprehended a suspect in connection to a stock market scam that resulted in a victim losing over Rs. 3 crore. The suspect used social media to gain the victim’s trust and convinced them to invest in a fake stock market platform.

The IRS has been urged by Senator Bob Casey to address the issue of large tax bills for victims of scams. In some cases, victims are left with significant tax bills for the money they lost to these schemes.

The Starbucks Stanley Cup scam is another example of how scammers are using popular brands to lure victims into their schemes. In this case, individuals were promised a chance to win a Starbucks gift card by entering their personal information, but instead, their information was used for fraudulent purposes.

The Enforcement Directorate has detained a construction executive in connection to a housing fraud investigation involving Rs. 45 crore. The executive had promised high returns on investments in a housing project but instead used the money for personal gain.

Even prominent individuals are not immune to these schemes. In one case, an ex-White House scientist was scammed out of $650,000 and was required to pay taxes on the money she never received. This serves as a reminder that anyone can fall victim to these scams.

To protect yourself from these scams, the IRS recommends being cautious when someone you don’t know asks you to invest in crypto or other high-return investments. Always research the investment platform and verify its legitimacy before sending any money. And remember, if it sounds too good to be true, it probably is. Don’t let yourself be the next victim of a pig butchering scheme.

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