Pig butchering, guaranteed returns and Ponzi schemes
Long-con romance and friendship scams, "guaranteed" crypto returns and Ponzi schemes explained, so you can recognise them early.
Some scams are quick. Others are patient and can go on for weeks or months. These slow scams often cause the largest losses, because victims are drawn in step by step.
Pig butchering (romance and friendship scams)
The name comes from the idea of "fattening the pig before the slaughter". It usually starts with a friendly message, often a "wrong number" text or a contact on a dating or social app. The stranger is warm, attractive and patient. They build a friendship or romance over days or weeks.
Eventually they mention that they make money trading crypto, perhaps with help from a relative "who works in finance". They guide you to a trading website or app. You make a small deposit and see impressive profits on screen. You may even be allowed to withdraw a little, which builds trust.
Then you are encouraged to deposit more. When you try to withdraw a large amount, suddenly there are "taxes", "unlock fees" or "account verification charges". Each payment leads to another request. The platform was fake from the start. The profits on screen were just numbers.
After a month of daily chats, a new online friend helps Peter open an account on a "trading platform". His 500 USD deposit grows to 900 on screen in a week. He deposits 10,000 more. When he asks to withdraw, he is told to pay a 15% "tax" first. He pays, and then a "security deposit" is required. None of the money can ever be withdrawn.
Guaranteed-return schemes
Any offer that promises a fixed high return with no risk, such as "2% per day" or "guaranteed 30% a month", is a major warning sign. Real markets go up and down. Nobody can guarantee profits in trading.
Ponzi schemes
A Ponzi scheme pays early investors with money from newer investors, not from real profits. It looks successful while new money keeps coming in. When new deposits slow down, it collapses and most people lose their money. Many such schemes reward you for recruiting friends, which spreads the losses to people you care about.
Getting a small payout early does not prove a scheme is real. Paying early participants is exactly how Ponzi schemes and pig-butchering platforms build trust before the large losses.
Protect yourself
- Never take investment advice from someone you only know online.
- Never use a trading platform that someone sent you a link to. Check its authorisation with your regulator.
- Treat "guaranteed" or fixed high returns as a scam until proven otherwise.
- If you are asked to pay a fee to withdraw your own money, stop paying. It will not end.
- Talk to a trusted friend or family member before sending money. Scammers often ask you to keep it secret.
A free account tracks lessons, unlocks the quizzes and gives you 10,000 virtual USD (no real value) to practise with.