Under the Bureau of Investigative Journalism’s lights, the UK hosts about 168 companies somewhat involved in crypto scams. Many of these companies running “pig-butchering” schemes exploit the loopholes in the Company House registration system. One of the gaps is that it is very cheap (costs only £12/$14) to register a company in the UK.
Since companies must provide an office address in the UK to register, dozens of startups share physical addresses, like an empty apartment, to which they have little to no ties. The “lax” laws in the UK for companies’ registration play a big part in convincing victims of their credibility, with many claiming they would not have fallen for the scam had the companies been located elsewhere, the report claims.
Pig butchering refers to scammers essentially fattening their victims by slowly building trust before going in for the kill. Typically, the victim is contacted through social media like Twitter or Instagram by a scammer who gradually gains their confidence and eventually raises the issue of finances or investing in crypto or forex.
The victim is then persuaded to invest a small sum at first, usually depositing in a wallet or exchange controlled by the scammer. The scammer fattens the victim further by building more trust, even incorporating romance, and persuades them to transfer a more considerable sum, only for them to disappear with all the funds leaving the victim high and dry.
Pig-butchering gained prominence in 2019 as a scam targeting men in China, but the perpetrators have since widened the net. In the UK, it is estimated by ActionFraud that in 2022 alone, the losses due to crypto scams rose by 72% to £329 million.