This scam is named after the practice of fattening a pig before butchering it. It is a type of fraud in which the victim is gradually lured into making increasing monetary contributions, generally in the form of cryptocurrency, to a seemingly sound investment before the scammer disappears with the contributed money. The scam follows a common scheme, here are the steps to look out for.

1. Perpetrators will contact you out of nowhere via text messages, dating apps, or social media platforms.
2. Perpetrators will try to develop meaningful relationships with you, gaining your trust. They may offer you high-yield investment opportunities in virtual assets, such as cryptocurrency.
3. Perpetrators will tell you to open accounts on online investment websites and instruct you to deposit money via wire transfer to shell companies, or direct transfers on legitimate virtual asset service providers (VASPs) or cryptocurrency exchanges.
4. Perpetrators will pressure you to invest more money, or your relationship with them will end.
5. You can be duped, and the fraud will end: When you attempt to withdraw money, websites may demand that you pay additional fees to do so; or you may be locked out of the account and never hear back from the perpetrator. Perpetrators disappear with all your funds.

Victims of “pig butchering” scams suffer the loss of both their life savings and that of paying tax on the income lost to the scammers. However, there may be some limited relief available for the victims, where in certain cases, the lost funds may generate a theft loss deduction.