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Analysis · Security and scams

Pig butchering scam: how it works, what the FBI and FinCEN report, and the recovery trap

Published 2026-10-14By the CryptoGuardz Register Desk6 min read8 sources

Photo: Nate Smith / Unsplash

In short, from the documents

Pig butchering scam: how it works, FBI figures

Pig butchering is a crypto investment scam in which a stranger builds trust over weeks, steers the victim to a fake trading platform, shows invented gains and then takes everything. FinCEN described it in alert FIN-2023-Alert005. The FBI's 2025 report records about $7.2 billion lost to crypto investment fraud. Paid "recovery" offers that follow are a second scam.

Piece published 2026-10-14Reviewed by CryptoGuardz Register Desk, editorial desk

A pig butchering scam is a crypto investment fraud in which a stranger builds a friendship or romance over weeks, steers the victim to a fake trading platform, shows invented profits, and then takes everything. FinCEN named it in alert FIN-2023-Alert005 in September 2023. The FBI's 2025 Internet Crime Report records about $7.2 billion lost to cryptocurrency investment fraud across 61,559 complaints, which the report calls "the highest source of financial losses to Americans in 2025".

The FinCEN alert, the FBI report and the DOJ and Treasury releases below were read on 14 October 2026. The name refers to fattening the victim before the slaughter. The FBI report itself does not use the term; it counts these losses under cryptocurrency investment fraud.

What is a pig butchering scam, per FinCEN?

FinCEN's alert of 8 September 2023 calls it "a prominent virtual currency investment scam called "pig butchering."" It sets out four stages, which the table follows:

Stage in FinCEN's alert	What the victim sees	What is happening
Initial contact	A wrong-number text or an old "friend"	A scripted approach, trust built over time
Investment pitch	An app or site showing crypto trading	A platform the scammers control
Promise of greater returns	Rising balance, a small withdrawal allowed	Invented figures, bait for larger deposits
Point of no return	"Taxes" or "fees" demanded to withdraw	The balance is gone, contact ends

The alert says victims in the third stage have liquidated tax-advantaged accounts or taken out home equity lines of credit and second mortgages. In its case study, seven spoofed domains were used against five US victims who lost over $10 million.

How do you spot pig butchering?

By the pattern, not the person. FinCEN's red flags for banks double as a checklist for the target. Among them:

A customer mentions that they downloaded an application on their phone directly from a third-party website

FinCEN Alert FIN-2023-Alert005, retrieved 2026-10-14

A red fishing hook hanging on a line against a grey background — Illustration: a baited hook. The scheme starts with a friendly message and only later asks for money. Photo: Kaptured by Kasia / Unsplash

"Pig Butchering" Cryptocurrency Scam | Houston PoliceVideo by Houston Police on YouTube. Watch on YouTubeA warning from the Houston Police Department's own channel describing the scam pattern this section lists from FinCEN's alert.

and a transaction that "is for "taxes," "fees," or "penalties."" Others: a customer "with no history or background of using, exchanging, or otherwise interacting with virtual currency" suddenly sending wires to an exchange, and a customer "instructed by an individual who recently contacted them".

For the person being courted, the practical signs are the same. A new contact who moves the chat to another app, talks about their own trading gains, and recommends a platform not found in an official app store. A balance that only grows. A withdrawal blocked until a fee is paid. In FinCEN's account, that fee demand comes just before the scammers cut contact.

How much do Americans lose to pig butchering?

The FBI's 2025 report gives the totals. All internet crime: 1,008,597 complaints and $20.877 billion in losses. Investment fraud: 72,984 complaints and $8,648,617,756. Within it, cryptocurrency investment fraud: 61,559 complaints and $7.228 billion on page 53. The report prints a second figure for the same category, $7,277,868,919, in its crypto-nexus loss table on page 55, and rounds to $7.2 billion on page 11; it does not explain the gap. People aged 60 and over reported $4,347,081,557 in cryptocurrency-related losses in the 60+ section on page 46, and $4,432,224,488 in the crypto age chart on page 52.

For scale over time, FinCEN's 2023 alert cites the 2022 IC3 figures: investment fraud losses of $3.31 billion, with cryptocurrency investment fraud rising 183% to $2.57 billion.

The FBI also contacts victims before they know. Its Operation Level Up notified 3,780 victims of cryptocurrency investment fraud in 2025. Of those, 78% did not know they were being scammed, the estimated savings were $225,871,319, and 38 were referred for suicide intervention.

What have the DOJ and Treasury done about it?

The cases now target the compounds. On 14 October 2025 the DOJ announced the indictment of Chen Zhi, chairman of Cambodia's Prince Group, on wire fraud conspiracy and money laundering conspiracy charges, and a civil forfeiture complaint against "127,271 Bitcoin, currently worth approximately $15 billion." The release says people "held against their will in the compounds engaged in cryptocurrency investment fraud schemes", and that all defendants are presumed innocent until proven guilty.

On 12 November 2025 the US Attorney's Office in Washington set up a Scam Center Strike Force with the Justice Department's Criminal Division, the FBI and the Secret Service, reporting $401,657,274.33 in cryptocurrency seized and forfeited. On 23 June 2026 Treasury sanctioned nine more individuals and 26 entities tied to the Prince Group, citing a US government estimate:

Americans lost at least $10 billion in 2024 to Southeast Asia-based scam operations

US Treasury press release sb0538, retrieved 2026-10-14

The same release describes recruits lured with fake tech or customer service jobs, whose passports are confiscated on arrival. FinCEN separately cut Cambodia's Huione Group off from the US financial system in an October 2025 final rule, which Treasury now proposes to extend to H-Pay Service PLC.

Can you get money back from a pig butchering scam?

Sometimes through law enforcement forfeiture, never through a paid recoverer. Report to the FBI at ic3.gov and to the exchange the funds left from. The legitimate routes are on the crypto scam recovery page.

Then expect the second scam. The FBI's July 2026 announcement describes "recovery" or "double-dip" schemes in which people posing as law enforcement, banks or cybersecurity firms "promise to recover the victim's lost money or track down the original thieves," and take more. Its rule: "IC3 will never ask for payment to recover lost funds." The FTC: "Never pay upfront for a refund or help with a refund."

Exchange staff impersonation is a close cousin; see how Coinbase scams work. A fake platform's deposit address is often supplied as a USDT address, covered in USDT networks and freezes.

Quick answers

What is pig butchering in crypto?

A long-con investment scam: trust built over weeks, a fake trading platform, invented gains, then demands for "taxes" or "fees" before contact ends. FinCEN described it in FIN-2023-Alert005.

How much was lost to crypto investment fraud in 2025?

About $7.2 billion across 61,559 complaints, per the FBI's 2025 Internet Crime Report, which prints both $7.228 billion (page 53) and $7,277,868,919 (page 55) for the category.

Are recovery services for pig butchering legitimate?

Any that charge upfront match the FBI's description of recovery scams. "IC3 will never ask for payment to recover lost funds." See the scam recovery page.

Who runs pig butchering scams?

US releases tie many to Southeast Asian compounds. The DOJ charged Prince Group's chairman in October 2025 and sought forfeiture of 127,271 bitcoin.

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Sources

About this piece

Compiled by the CryptoGuardz register team from the sources listed above. Research and drafting are AI-assisted and reviewed by a named editor before publication. Nothing here is a recommendation to gamble. If a figure or a reading is wrong, tell us and the correction is logged in public.