Unchained - How This Prosecutor Is Spearheading the Fight Against Crypto ‘Pig Butchering’ Scams - Ep. 455

Episode Date: February 14, 2023

Erin West, Deputy District Attorney of California’s Santa Clara County, has heard firsthand tales of scammers preying on victims for hundreds of thousands of dollars. She joins the show to explain the scamming technique known as “pig butchering,” how it is estimated to have raked in tens of billions worldwide, and why it has led to suicide in some cases. West makes the case for why victims need empathy and how law enforcement is working with exchanges to claw back scammed funds. Show highlights: Erin’s background and how she started investigating crypto crimes what exactly the “pig butchering” method entails — and why it’s called that what kind of people scammers are targeting the devastating stories that have arisen from these crypto scams fresh intel on where the fraudsters are located whether the scammers may be connected to foreign governments  how the victims are often turned away by U.S. law enforcement agencies how Erin’s agency was able to return almost $1 million to victims late last year what local agencies can do to address these problems how law enforcement agencies around the U.S. are lacking crypto education the workshops Erin has been leading to help such agencies get educated the relatively low number of NFT-related scams her agency has dealt with so far what Erin recommends for victims of “pig butchering” scams Thank you to our sponsors! Crypto.com FTSE Halborn NYU Links SIM Swaps and Pig Butchering scams:  Forbes: Hackers Have Stolen Millions Of Dollars In Bitcoin -- Using Only Phone Numbers WIRED: What Is a Pig Butchering Scam? Podcast on Indian telemarketing scams: Chameleon: Scam Likely — Campside Media Guests: Erin: LinkedIn Learn more about your ad choices. Visit megaphone.fm/adchoices

Hi, everyone. Welcome to Unchained, your no-hype resource for all things Crypto. I'm your host, Laura Shin, author of The Cryptopians. I started covering crypto seven years ago, and as the senior editor, Forbes, was the first Main Tree Meteor reporter to cover cryptocurrency full-time. This is the February 14th, 2023 episode of Unchained. If you've been enjoying Unchained, please leave us a review on Apple Podcasts. It's a simple way to help others find the show. Become a disruptor in the emerging fintech space through NYU Stern's new Master of Science in FinTech program. This one-year part-time program is designed with full-time working professionals in mind. Visit stern.new.n.org slash MSFT-Hifened.

Web3 projects lost nearly $4 billion of crypto assets in 2022, but nothing is more expensive than losing trust. Secure your company with Hallborn's best-in-class security advisory solutions. Visit halborn.com for more. Footsie Russell, a leading global index provider, has applied its trademark expertise, governance, and structure to digital assets, offering institutional quality data to build, manage, and measure investment portfolios. The Exchange-Vetted Flagship Index series measures the investable digital asset market from large-cap to microcap.

Get your index data from a market leader. Find out more at footsie rustle.com slash digital asset. Buy, earn, and spend crypto on the crypto.com app. New users can enjoy zero credit card fees on crypto purchases in the first seven days. Download the crypto.com app and get $25 with the code Laura. Link in the description. Today's guest is Aaron West, Santa Clara County Deputy District Attorney. Welcome, Aaron.

Thank you so much for having me. You've been with the Santa Clara County District Attorney's Office for 25 years, and you're now the prosecutor for React, which is the county's high-tech investigative task force. And it's actually been known to take down international sim swappers, which are a scourge of the crypto community. And it's also now battling a common crypto scan known as pig butchering. I'm sure you didn't start out investigating crypto crimes. So why don't you tell us a little bit about how it was that you came to this particular line of work? Sure. I've been at the district attorney's office for 25 years, so I've had the opportunity to handle lots of different types of cases in the office.

I spent a good portion of my career about nine years doing sexual assault cases, and during that time, I had two boys, and I found that doing those sexual assault cases was getting more and more difficult when I had kids similar to the ages of kids that were involved in the cases that I was working. So I looked around the office for something else that caught my interest, and I'd always been really interested in social media, and especially social media's effect on kids, and started to think that maybe the React Task Force might be a good place for me. So React is a, it's a high-tech task force made up of detectives from different local agencies,

and some federal agencies, and they focus on high-tech crime. So at what point did crypto crimes start getting on React's radar? So I started with React about six years ago, and then in 2018, March of 2018, we got a case involving a local man who had lost service on his phone. And at the same time, he lost service in his phone, his friends on Facebook started getting messages apparently from him. and he realized he couldn't access his Facebook account. He was locked out of his Gmail account. And most germane to the story, he was locked out of his cryptocurrency account.

And that was the first case of sim swapping that we saw in Santa Clara County. And it was from there that the officers and I began to get a taste of what cryptocurrency cases were going to look like. Yeah, I wrote a very extensive article about this in late 2016. And then later, I had my mind. own phone number stolen. But because I had written about how to secure yourself. So nothing happened with with me. But yeah, that's been a big problem in crypto. And something that I often tell people who are new to crypto, you know, you shouldn't use your phone number for 2FA. And if you do, it should be like a Google voice number or something like that. Oh, 100%. Yeah. So obviously now we are

almost five years later, I guess, after, you know, you initially got into this, over. that time, how have you seen crypto scams evolve and how big would you say this problem is? So when we were seeing those sim swap cases, it was a limited number of people that were being victimized by sim swapping. But recently we're finding that all the old techniques of fraud are now moving to crypto. And where people, where you used to get the pop-up scams telling you something wrong with your computer and you could send a check, or then it moved to gift, cards and now we're seeing that those people are being directed to Bitcoin ATMs to move their money. So more and more, we're seeing that if there is going to be a crime involving illicit movement

of money, then we're going to see crypto involved. But the major issue that we're seeing now is the pig-butchering scams. And what we're finding is that those scams are, they're at a scale we have never seen before. They are literally decimating families and enabling crooks to reach out and grab people's entire nest egg, entire savings. We're watching people liquidate college accounts, 401ks and borrow against their homes in these cases. And so never before have we seen a type of fraud where people were losing everything they had. Wow. Yeah. And And let's outline this problem for the audience. I mean, I have to just tell you up front and even, you know, flag this for the listeners.

Some of the accounts that I read are just harrowing and absolutely heart-wrenching. You know, they just sort of suck people in in this emotional way when they're actually, often at least the main case that I read, this person actually was undergoing also their father dying at the same time and was literally being scammed out of their life savings and the savings of other people around them simultaneously, and it was truly heartbreaking. So why don't you explain what pig butchering is and how it works? Sure, sure. I'm familiar with the specific case you're talking about, and we were able to claw back some money for that victim, and I'll tell you about that in a minute.

But when you think of a traditional pig butchering case, the scammers are going to reach out to victims in a number of different ways. One way that we see frequently is on dating sites. Another way is on Instagram. Another way is on LinkedIn. Another way is just a random text that pops up on your phone. And I feel like when I bring those up, a lot of people say, oh, I've gotten a random text on my phone. That's so weird. But that's, and a lot of people, believe it or not, are responding to those. So what the scammers are doing is they're looking to make any connection with someone. And then they immediately move from whatever the platform that is to WhatsApp or Telegram or something else that's encrypted. And from there, they begin a long-term con of really creating a trusted relationship with

the person that they are scamming. It is wholly and completely manipulative. It is specifically designed for each individual that they're working on. They have scripts for how to lure in a divorced woman, how to lure in a man taking care of his family, how to lure in a millennial. Like they are prepared for anything. So they begin that process of really getting to know their victim, and then they really show an enviable lifestyle. They will show pictures of them traveling. They will suggest, oh, I'm going to Hawaii.

Should I stay at this resort or that resort? So showcasing something that perhaps the victim might. like to have in their life. And after this trusted relationship is developed, that's when the scammer will say, you know, I'm able to afford this because I dabble in crypto. I wonder if you might be interested in investing in cryptocurrency. And oftentimes they, the scammers are dealing with with victims who have no familiarity with cryptocurrency. But sometimes they are well educated. We've seen doctors, we've seen software developers, we've seen people from all walks of life that can be lured in in this way. From there, the scammer will suggest that their uncle or someone they know could provide them some tips on how to invest in cryptocurrency.

The victim will make an initial investment. And then as soon as that investment is made, it goes into, it goes straight to the, the, scammer. But what the victim thinks, because they are seeing a website that makes it look like they have an account and that their money is rising. And unbelievable growth is shown to them. And they keep thinking they're making more and more and more money. Impressed with those earnings and gains, the victims then begin to liquidate more and more assets to put into this. And you really highlighted one of the tragedies that we're seeing in that, for example, that particular victim was very clear with this scammer that, you know, I, my father is dying. I will be responsible for supporting my siblings. I really can't afford to lose this money. Are you sure this is safe? Even explaining to the scammer that, you know, if this is wrong, I will, I will kill myself. I can't take the pressure of this. And, and, and, and, And the horrible nature of this scam is that they continue to reassure.

Yeah. I think the other part that really got me was that this person put in, I think it was something like $440,000. And then the app showed him that he'd actually lost it all. What the scammer did was say, well, well, if you get more money, then we can make back the losses because I know about this great trade coming up. And so this person who had literally just lost kind of like everything went out to other friends and family to get more money. And then they'd also taken out a line of credit on their home. Yes. And they went way more into the hole,

eventually gathering another something like $600,000, which then, of course, the scammer took. And then finally what happened is they, the scammer did it again, showing even more losses. And then I think maybe this person wise up or, you know, I'm not sure, but eventually they lost over one point two. It was like $1.2 million or something like that. Yeah, I think that's the hideous, hideous quality of this is that the victims are getting re-victimized over and over and over. Another common thing that they do is when the victim tries to take money out of the account, they'll say, oh, but you have to pay the taxes on it first. And the taxes are generally 25% of the value of the account, which the scammer knows that the victim has put in everything that they have.

And so that's when they'll do exactly what you were describing, go to friends and family, take out lines of credit on the house. And I've seen frequently that often the spouse is not even aware that any of this is happening. And so then I spoke to a man recently who was devastated because he had lost everything, and now he was likely to lose his marriage because he hadn't told his wife what he had been up to. So it's a tragedy. And I think what's also terrible about this is they're hitting people. Like I know oftentimes we want to attribute this to something that happens to seniors.

But really, they're hitting people at like their late 40s, their late 50s, you know, 60s where they have taken everything the victim has and they don't have the time in life to be able to put themselves back where they once were. It's devastating and it's a real loss of financial security. Yeah, I saw that crypto investigative analysis from Cipherblade estimated that the losses in 2021 from these types of scams hold it up to tens of billions of dollars, probably globally. But one thing I just had to ask about was, so where does the name pig butchering come from? Oh, yeah, fair question. And I'm glad you asked because there is some controversy about that term, actually. It comes from, it's a Chinese term of Sha Zhu Pan, which I think means something like loosely translated, it's pig butchering. This scam originated in China.

And the concept is that you are fattening up the pig as you develop this trusted relationship with the victim, that you are fattening at the pig, that you are fattening up the pig, giving them reason to trust and believe in your scheme. And then ultimately, you're going to slaughter them and take everything that they have. it's hideous. It's a really, it's a hideous term. And there's a lot of controversy over using the term because it degrades the victim. But I haven't been able to come up with a term that much better describes the absolute violence in what's happening to victims. Yeah, I think that was another thing that struck me. And we're going to put this in the show notes, but there was an amazing article by someone from Forbes, my old workplace, about this case of, you know, Sai, who was, um, the person that we've been talking about. And one other thing that just struck me about the

communication was that he had become so close to his scammer that he was reaching out emotionally to her at different points. Like, oh, you know, my dad's in the hospital right now. I don't remember the exact messages, but there were times when he was going through something difficult and he would initiate contact being like, you're someone I can talk to about these problems I'm having. So, yeah, I just feel like, on every level, it's not even just the financial bit, but to have that kind of emotional dependency on somebody and then to have them betray you so deeply. I mean, obviously, they're not who they say they are, but all of those things together, I think, I agree with you. And it does show a certain level of violence.

Yeah, I 100% agree with you in terms of the loss to the victim. It's not, yes, the loss of the finances is one thing. But also, yes, the loss of this trusted relationship. And I've certainly, read those, the transcripts of some of those texts myself. And really, he relied upon her and relied upon that relationship. And so to not only lose your money, but lose this important person in your life is beyond devastating. Yeah. So one other thing that I was so curious about, and by the way, people, there's a sort of silver lining here, which we are going to get to in a moment because Aaron is doing amazing work in this area. But I also just, was so curious because one other part of that case was that the scammer had SII download an app from

the app store. And so you would imagine that, you know, it's just like any normal app. So how is it that these apps are either showing the fake returns or account balances or, you know, how is it that the scammers are even able to get the app into the app store? You know, I don't totally understand the technical part of it. So I can't really speak to it. But, what I do know is that it's not always the ones that are coming off the app store. Often they will lead the victims to a website where the victims will download something themselves. I know that wasn't the case in size case. They will download.

And from what I've heard from Secret Service, who has taken a decent look into this, is that these apps that the victims are downloading are so dangerous that they don't realize what they're giving authority for those apps to do. Like in some of them, they're giving the scammers the ability to see everything on their phones. They're giving them read-write capabilities so manipulative, so calculated, and so destructive. It's a machine that is operating this scam, and it's a major threat. Yeah, and so who is perpetrating these scams? What we know is that these scams are emerging from Southeast Asia.

what we know is that there is a small backpack used to be a backpacking beach town in Cambodia known as C-Hunukville. Pre-COVID, what's believed to be Chinese organized crime started moving into that city and building casino towers. COVID hit and they were unable to fill casino towers and they came up with a new strategy and their strategy was, well, why don't we fill those towers? hours with scam facilities. And to do that, they human trafficked in personnel to do that. Now, some of them are willing participants, but a great percentage of those who are being used to commit these scams have been human trafficked in. They are from surrounding Asian countries and they are led to believe that they are coming to work in a call center, that room and board will be provided and that they will be able to send money home. They'll be making a decent living.

And when they get there, they find out that they are going to be living in a casino tower with bars over the windows. They're unable to leave. It's a compound guarded by armed personnel with AK-47s, and they're required to work up to 16 hours a day. Quotas are set for them, and they are beaten if they don't reach those quotas. What's absolutely mind-boggling about this crime is that we have victims on both sides. So we have victims that are perpetrating these scams according to a playbook provided to them. And we have victims that are being absolutely devastated as a result of that perpetration. So it's a situation unlike anything we have ever seen before. So it strikes me that you have all these details about the masterminds of these

scams, would it then be a good assumption to make that authorities and those countries have found these masterminds and have been able to put them through the justice system? So it's a very interesting problem. What I can tell you based on what I've read from and what I've heard from boots on the ground there and what I've heard from independent media in that area, is that there are connections that are being made between the people who are running these scams and potentially people running the government in the places where these are being allowed to happen. We know that a great number of these scams have been moved to Myanmar recently, and that we're finding that these crimes are happening in locations that are not very hospitable to

American intervention. And there's a tremendous human rights issue afoot here that needs national attention, international attention. Wow. So some of this is like in cahoots with a corrupt local government. Is that what you're saying? From what I have been able to gather from the sources that I've seen, it appears that someone is allowing this business to flourish in their country. And someone is not is not making it stop in their country. And local journalists talk about, I think actually I read something this morning from, that was talking about even one of the Cambodian government officials saying that they were too soft on when they tried to shut down parts of this compound. So they're definitely, they are aware of what's happening and yet it continues. And I think there is plenty of work to be done diplomatically to try to make this stop.

And are you seeing any trends in the types of victims that they're, targeting? So that's interesting. I would say age range, we see them at all ages. We see millennials up to seniors. But what we are seeing is a lot of Chinese Americans, Chinese-speaking Americans being targeted. And perhaps that's because they are able to communicate in Chinese with some of the Chinese scammers that are operating these. We don't know exactly how those links are being made. But definitely, we are seeing more Chinese Americans than anyone else. So it's kind of funny that we're doing this and I'm asking you this question because in the last like week or so, I tweeted something like, oh, you know, I got this message on telegram and it was

like such a weird message. The person said something like, you look Asian, are you Asian? And I, I thought it was so funny. I've literally never heard of this person. I don't know how they got my information. And it was so random and so hilarious that I just tweeted it and I like made a funny joke about it. And now I'm thinking, wait, were they trying to target me for a big butchering scam? Could be. Yeah. I mean, I was going to say it's so rampant that I was at dinner with my boyfriend on Friday night. And I was talking about I recently became aware of a suicide that happened and in the U.S. related to a victim of a pig butchering scam. And I was talking to my boyfriend about it.

And he's like, you won't believe what's on my phone right now. And he picks up his phone. And there's one of those ridiculous texts that's like, hey, what are you doing tonight? You know, that it's constant. And he says he probably gets three or four of those a week. Oh, interesting. I've never gotten one. But everyone I talked to has received some sort of weird,

message like that. In fact, one of the presentations I do talks about how just sitting in my own backyard, these crimes are coming into my backyard. And it's my girlfriend. And she's saying, she's laughing because she gets this text that says, you know, hey, Mary, I was driving down Maple Street and thought of you. And she was like, isn't that funny? And I was like, no, it's not funny. I know exactly what that is. And that's someone trying to get you to respond. Right. Right. Wow. Okay. This is very fascinating. Yeah. And like, yeah, it's funny to me also because most people,

or most people who have some sense of like Asian, kind of what Asian last names are like, most people would know that Chin is actually a Korean name. And so, um, but anyway. But that's funny, right? I mean, yeah. Yeah, like maybe this person was scrolling telegram and saw my picture and I don't know. Who knows?

Um, but anyway, so once victims realize that, they've been scammed, what kind of experiences are they having typically when they reach out to law enforcement? Horrible experiences. They're having horrible experiences. And this is, now you've really keyed in on what's motivating me because what's happening is they are showing up at their local police departments and the police departments are not, they are not empathetic and they don't understand cryptocurrency. And so they don't know what to do with these cases. So they are, they are shutting their doors on victims saying, we can't help you. This sounds, this sounds like

something for the feds. And so then victims leave and they go and they try and report to the FBI. And the only way to do that is to report through IC3, which is an online portal. And when they do that and going through the paperwork of IC3, the form, like there's not even an appropriate place to put in information about cryptocurrency. They ask for bank accounts, but they don't, they're, they're not well set up for it either. And then they run the gamut of trying to reach out to literally anyone they can think of and they become more and more frustrated and in agony that nobody is listening to them, that their whole world has ended and nobody cares and nobody is paying any attention to them. And to me, that's what's not acceptable, especially when we're talking about a magnitude of this

crime in the billions and billions of dollars and that we're now, seeing suicide and we're seeing, you know, I took a call from a guy last week and it was really the first time I had spoken to, and I was speaking to this man and I thought he was a little kind of standoffish and I was trying to be really helpful. And then I realized like, oh, he's not okay. And he just broke down in sobbing that like until you take a call like that, until you talk to someone who's gone through something like this, it is really hard to understand the just complete instability of someone who's lost everything. And so back to your question with law enforcement, yeah, and they're not getting help. And so I was lucky enough to work for,

to work for an agency that has some familiarity with crypto. And so we thought this is, this is just really something that as a team we need to take on and work on. All right. So in a moment, we're going to talk about what that solution is, but first a quick word from the sponsors who make this show possible. Futsi Russell, a leading global index provider, recently announced the launch of its market cap digital asset index series. The newly launched Futsi Global Digital Asset Index series, built in association with the experts at digital asset research, measures the investable digital asset market from large cap to microcap, leveraging a transparent asset and exchange vetting process. Futsi Russell has applied its trademark expertise, governance, and structure to digital assets, offering institutional quality data to build, manage, and measure investment portfolios. Get your index data from a market leader.

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Download the crypto.com app and get $25 with the code Laura. Link in the description. Back to my conversation with Aaron. So when you say that you're trying to do something about it, what is that? So when we realized how much volume and how much loss was happening, and I don't mean just the big cases where people are losing the millions of dollars, I'm talking about the cases where people have lost 60,000, but it's all that they have, or 6,000, that people were routinely trauma.

by this. And so we thought, well, what can we do about this? And in law enforcement, our first instinct is always like, well, who can we arrest? We've got to put a stop to this. And when we did the deep dive and figured out where this was coming from and what we as a local agency could really do, it was clear that we were not going to be able to make any arrests. So we thought about what we're good at, and that is tracing cryptocurrency. And so we decided to start tracing out some of the victims that had reported to us. And as this was happening, I would say that exchanges were becoming more and more cooperative, that maybe two years ago this would not have been as possible as it is today, in that we were able to trace cryptocurrency belonging to victims to exchanges. And then we were able to get search warrants to recover those funds. We seized funds. And just before Christmas, we were able to return almost a million dollars to 10 different victims. Great. How were you? you able to do that? So the way we did it is, you know, I try to think of this as simply as I can, that we were chasing stolen bicycles, say, and we found these stolen bicycles in a storage facility, in another country. And that storage facility let us take our stolen bicycles back. And then from there, what we said to a judge is, we're holding stolen bicycles. We've given the person who's renting this storage facility information about the fact that we're going to the fact that we're going to be stolen bicycles. We've given the person who's renting

the storage facility information about the fact that we were going to be asking these bicycles to be returned. And they haven't shown up and they haven't filed any process. So we would like you judge to return the stolen bicycle back to the victim. So it's as easy as that. It's like we went and we got the stolen crypto pursuant to a warrant. We held it. We gave information to the account holder telling them what we were going to do with it, giving them the opportunity to be heard. they didn't. And as a result, the judge then heard that a victim was claiming that property is their money, and the judge has awarded the return of that money to each of these 10 victims. And so in this case where you were able to return some of the money to victims,

is that something that you've seen other districts be able to do or other prosecutors be able to do? Or what percentage of cases do you think it is that victims are, actually getting any money back. So I think what we figured out once we started to do this was that everybody was operating in their own agency and not sharing any information and that we really didn't know what other people were doing. And so I thought that it would be helpful to start a group, an online group called the Crypto Coalition. And it would be people, law enforcement only, who were working in the crypto space to be able to communicate and see what other people were doing. And we found that what we were doing at React was was pretty novel and that,

you know, there were some, we definitely have some partners across the nation that are doing this. I know that Las Vegas has been very successful in getting money back to victims. But other than that, we really hadn't heard of anyone else being successful at this. So we really, we wanted to spread the word that this is doable and that we owed it to victims to do this. So since I started that group back in September, we're up to nearly 600 people now. We met yesterday online and discussed particularly pig-butchering cases, how React is handling them. And we taught them what we've learned. We're saying this is one way to do it. I mean, certainly there are other ways to attack this. But this is how we're doing it and we're happy to share what we're doing.

And so what are those methods? Like what is it that you think governments or different government agencies could be doing but haven't really instituted yet. So I think there are a couple different like parallel tracks. So I think, I think at the state and local level, we are the front lines for victims. We have the victims walking through our doors and we should be ready to greet them with kindness and with someone who can take a report and at least know what to ask in the report. And then I think that we should be able to effectively, the way we do it at React is we just call it, we triage it. We look at, at the addresses they give us and we do a quick tracing and

determine whether or not there's any recoverable funds that we can go after. Definitely a roadblock is that a lot of our state and locals don't have access to tracing tools. A lot of our state and locals don't have a dedicated personnel that they can put on this. And so what I'd love to see going forward are, you know, shared resources and different smaller local agencies joining together to get a tracing license. So what I think that state and locals can do are they can be there for the victims, they can trace crypto, they can recover crypto, and they can get it back to victims. I think that the federal government has a much bigger role to play in this. And that's, we've got a major beast across the ocean that is literally decimating families household by household.

And somebody's got to, somebody has to handle that. Somebody has got to put a stop to that in whatever means is appropriate, way above my pay grade, but definitely something that can be done. There's a lot of people who do have influence. And I would love to see a really strong action taken against this beast. And I think there's enough pie for everyone. I think that there are lots of things that attorneys general can do. And they can shut down websites where,

where this, these domains where this crime is happening, they can shut down, I think that Match and Meta and LinkedIn can shut down profiles that are scammers that are trolling for their prey. I think everybody has some responsibility in this. This is a fraud that we have never seen the likes of before. Well, one other thing that I wanted to ask about was, you know, when you said that you do a quick scan to see if the funds are trackable or traceable, or recoverable or some term that you used. So how do you define that? Is it just if it went to an exchange or what are you looking for? Right. So what we're looking for is we are tracing the funds to see if they are in a place that is accessible to law enforcement. So if we trace them and find they go to a cold wallet,

we don't have the resources now to stand by and watch that cold wallet and see what happens to it. What we can do is go through and see, is it going? Are these funds, going in a in a conservatively traceable way to an exchange where they will accept service of process from the government. Oh, but also when you said that you don't have the resources to track what happens to money in a cold wallet, I mean, I think it's not that hard to set up kind of like an alert if money moves out of right. I mean, right. But I guess what the way, you're right, but what I would say is that there are so many of these. that it's hard to keep track of all of them. But that's not the problem we're seeing. I think I probably

should have framed it better in saying what we are seeing is we're watching them go through to exchanges and then being liquidated. And then there's no funds left to recover. It's a speed game. We're trying to get there before the scammers move it. Oh, I see. Okay. And are there challenges due to the international nature of the scam? Like, is there difficulty simply because you have to coordinate so many different parties across the globe? In some ways, but in others, it's much easier than you think. And I think that that's one of the reasons why a lot of state and locals don't go after these funds is because they think that this is an international thing and so they can't do it. But really, when the exchanges that we are working with, and I would say that the exchanges that we are working with

are where the money is going, are amenable to law enforcement once finding an account with that exchange, providing them a request on letterhead for the know-your-customer information, tell us who this is, and tell us the balance of that account, and please freeze it. And they will do that. We then do a search warrant that is a standard California search warrant, but let's be clear, they are often international entities,

and they are not required to respond to our search warrant. But nonetheless, a number of these exchanges are very law enforcement friendly, are trying to police their own users and trying to make sure that it's a safe place to hold money. They don't want dirty money on their platform either. So despite not being, they're not required to comply with our search warrant, but they are complying with our search warrant. And that's enabling us to get money back. So when I hear state and locals saying, well, you know, it goes international and you can't get it then, it's not any more difficult than getting it from Coinbase in California. It's just as easy.

Okay. Well, that's hopefully giving some comfort to anybody listening to this show who is a victim of such a scam. Earlier when you said that you had done these workshops and I think you said it was something like 600 different, you know, people are getting involved. So is that kind of the scale that you would need for, you know, people nationwide who are victims of this to find that instead of, you know, dismissive response for their law enforcement, they're getting something where, you know, law enforcement feels empowered to try to help them? Right. I think that what we're seeing, we've developed a fantastic partnership with the Secret Service. And the Secret Service may not be top of mind if you are a victim of this crime. And you may not think like, oh, secret service is where I need to. to report, but I've spoken with the highest levels at Secret Service in terms of cryptocurrency, and they are very interested in pig-butchering cases and very interested in allowing victims to feel heard, and they have the capability to do the tracing. And so they've been instrumental on a nationwide basis. And I spend a lot of time daily just talking to people and talking to law

enforcement in different cities across the U.S. And I'm always delighted to find that there are really smart people working hard on this, but they're oftentimes working hard alone and are coming up with the same questions that we've wrestled with at React. And so this group that I've put together, I think, is an amazing resource for bringing us all together to have that conversation once rather than a thousand times independently. So as you're having these conversations with law enforcement around the country, what would you say is their general level of education about crypto? I would say their interest is

impressive to see. I would say their education is very low. I'm optimistic that they are starting to take notice of the fact that it's not just fraud that's happening this way. I mean, we're seeing even in New York, we're seeing robberies, you know, taking, getting people on the street and making them turn over their crypto. So I think people, I think that law enforcement, is beginning to understand the value of having a crypto education. I know the Secret Service has a fantastic resource in Hoover, Alabama, where people can go and be trained to deal with this. But what I will say is it's slow.

It's very slow. And there are a lot of hurdles for law enforcement to get over in order to be able to be helpful to victims. Yeah, yeah, you know, even just with what we discussed at the beginning of the show about the sim swaps, you know, as I mentioned, I first read about that in 2016 and I still know of it happening even today. Yes. Yeah. Yeah. Yeah.

People, you know, like when you have this new technology and people are just getting started, there's just so many behaviors they need to adopt that they aren't aware of. And yeah, so for law enforcement, I imagine it's the same thing. It's just like a learning curve and it takes time. So since these scams are being perpetrated on an international scale, as we discussed, are there any international organizations, whether governmental or otherwise, that are getting involved to help out? Definitely. There's GASO, a global anti-scam organization, is one where I know that they are very in tune with both sides of this. They have resources in the United States.

I believe it was started in Singapore, but they're in touch with some of the victims, the human traffic victims inside the facilities. They also provide a lot of help to victims of the financial scam. And what I've found also is that, you know, it's amazing the resources that come out once you start talking about this. And I've become acquainted with a number of different local and national resources for victims of romance scams and victims of financial scams in general. And I know that those groups have been really helpful to some of my victims in terms of just not feeling so alone. I will say that this is definitely an emerging area with the more I talk about it,

the more I realize how many people just have not even heard about it. And so recently, well, recently my React Task Force held a conference in Palo Alto, California, and there were about 150 members of law enforcement who had opted to be there as a crypto conference, right? And I asked, how many of you have heard of pig butchering? And really, it was maybe a third of the room, which I found amazing that, like, this is, this is the biggest scam going out there. the biggest crime and only a third of the people who have expressed interest enough to take time out of their workday to spend two days at my conference had even heard of it. So there's a lot of

education left to do here. Yeah, it reminds me of a narrative podcast that I listened to recently and I'm just, I'm not going to remember the name of it, unfortunately. But anyway, I will try to put this in the show notes because it's very similar to what you're describing. It was some kind of telemarketing scam, I guess, based in India, where it was these call centers of people that were scamming people out of money and they would direct them to go to different kind of like payday places or places where you could get prepaid cards and things like that. And the masterminds of these were like gazillionaires. They just made so much money from this. But it truly was run like a business. And, you know, what you described is super similar. But one other thing that I was,

wanted to ask was so you talked about this workshop that you held. And I believe that was part of a new group that you created called the Crypto Coalition. Right. Right. That's so yeah. So the, so the works, the conference that we held recently was really something different, something that I hadn't seen done before. It was a two-day conference. And what we found as React is we were, we were answering the same questions over and over again for different people. And, And we wanted to really create an environment where those questions would all be answered and that people would leave that conference ready to look at a case. It wouldn't be just a bunch of people talking to them about what they had seen. What we did on day two is we did workshops where we split them into smaller groups.

And we held four workshops. And the first one was how to create a government wallet. And it was, you know, sit at your laptop and figure out how to create a paper wallet. Or here's a treasurer. let's look at how you would work with that hardware wallet to create something. We then had workshops on, here's how to do some basic tracing in ether scan. Like even if you can't afford a fancy tracing tool, here's something that you can use to get yourself started.

We did a workshop on basic Bitcoin and, you know, what can you get from a Bitcoin ATM? How would you handle a Bitcoin ATM case? And then the last workshop was on seizure. and how we physically do that. And these were all taught by React and by U.S. Secret Service. So detectives who are in the weeds doing this every single day. And then we left them, we sent everybody home with a USB drive that had all of our warrants on it and all the documents we used to get money back to victims,

our sample protocol for how do you get this approved with your administration to do this work. And then we left them with a community. which is there are a lot of us out there who have some knowledge and who would love to share it. And so the Crypto Coalition is that group. And we have a list serve where it's very active. And then about every three weeks, we have a webinar where we talk about our successes. We talk about issues that we're facing. And then we talk about we have guests on there.

So it's been super effective because like we had we had guests on there from Binance. So that immediately thereafter, people who had cases with finance knew exactly who to talk to and who to work with and were able to affect seizure. So it's been very successful. And I think it's just really getting started. And while you were talking, you mentioned that you had gone over what you called Bitcoin ATM cases with this group. I don't even know what that refers to. Oh, my goodness. Well, listen to this. So I'm driving home Friday night and I see an email from a local victim who had found me on LinkedIn, who said, at 11 a.m. today, I received a call from someone I thought was my son. And he was crying and he said that he'd been in a DUI accident and that he had

injured a pregnant woman and her child in the back seat and that he was being arrested and they were taking his phone. So could you please call this lawyer and here's this lawyer's name and phone number. Wait, but this person didn't, I mean, was it the actual son or was it just some person imitating the son's voice? Yes, and I thought the exact same you thought, Laura. I was like, I think I would know my son. Well, it turns out you don't. When somebody calls and is crying and sounds enough like your son, your brain will fill in the details to, to allow you to believe that this is your son and that he needs your help. That part of the call wasn't super. long. What happened next is the man got directed to a lawyer. He called this lawyer. The lawyer said,

yes, I know your son. I know what's happening. He's getting arrested and he is going to jail in San Jose. Here's the phone number for the court clerk. She'll help you get bail together. So he calls the court clerk. She says, oh, well, we've got an outbreak of monkey pox in San Jose. So all of our new arrestees are getting transferred to the state of Nevada. Your son will be among them. And but if you want him to not go to Nevada, you need to get your bail together quickly, and that'll be $15,000. Normally, I wouldn't tell you to use a Bitcoin ATM,

but because you need to move money quickly, that's the quickest way to do this. So you need to go put $15,000 in a Bitcoin ATM and send it to this address, and that will bail your son out. And sure enough, that's what he did. And I can see the wheels turning, and they were the same that we're turning in my head,

And then I started to look into this, and this is a whole thing. This is a whole thing that happens on repeat, where it's called the grandparent scam. And it's a someone that they believe to be their child or their grandchild calls in an emergency situation. And the scam is that the victim then takes money to a Bitcoin ATM and moves it along. Oh, my goodness. Wow. Okay. Yeah. So, I mean, so much like this reminds me, because, you know, I, I wrote this book. In the book, I outlined like a number of scams and what people were doing is they would kind of prey upon a sense of urgency. Yes. And a lot of the scams I was reading about

involved the initial coin offering craze. And so what they would do is say, oh, you know, this is the last time you can get tokens at this price or we're going to do an upgrade. You need to secure your coins and move them before we upgrade the smart contract. You know, the deadline is in two hours, whatever, things like that. And so it's, it's all the same tactics. Yeah. And that's part of pigmaturing too. There's always, there's going to be a trading window in two hours. You need to get your stuff ready for this trading window. And it's, that's exactly what you're describing. It creates a sense of urgency and a sense of fomo that like you will miss out if you miss this window. Okay. And then the other thing that I heard you say was you're also teaching this group how to do seizure.

Is that just what you were explaining before about, you know, sending the, the request to the exchange and then getting the funds. Yeah, yeah. And I think what happens is that a lot of law enforcement who haven't done it get scared of the idea of, wow, there's going to be a lot of money being sent to me. How do I, how do I technically do that? And so we went through that as well. Oh, I see.

Okay. And then one thing I did want to mention earlier when I asked you about kind of international organizations working on this, you mentioned GASO. And I saw that it was founded by. somebody who was a victim of one of these pig-bitchering scams. And I guess she realized there is no international group working on this. And so she pulled this together. And so when you said they have insight even into the other side of the scam, from what I could read online, it seemed like maybe she is like from that part of the world. I think it said Singapore or something

like that. And so yeah, so maybe, yeah, maybe that's why, you know, with the, with the proximity and perhaps like some language abilities, they are able to get more information over there. One thing I was curious about was, I'm sure you're very well aware that, especially in the last couple years, a lot of people have become victims of NFT rug pools or they've just had their NFTs fished

from their possession or stolen. Are these the kinds of cases that your group is also learning to address? Definitely. We have had a couple of NFT cases, not a ton of them, but that definitely is part of, of the menu of type of cases that we would handle at React. And we, we just haven't seen too many of them. But I know that they are being seen. There was a discussion today on the, on my crypto coalition list serve about this and about, you know, about whether or not OpenC is holding the

private keys to these. Is there a, can you ask OpenC to return the NFT or, you know, who is actually holding the NFT? So it's definitely something we're talking about and thinking about it. We just have not had any not very many cases it react. All right. So the DOJ, due to the president's executive order on digital assets, also created a nationwide digital asset coordinator network this past fall. What is that? And what role do you see at playing and helping to combat these types of scams? Yeah, I think the DOJ is making some great moves toward having a national presence that is competent to deal with digital assets. So as part of their end set, their national currency enforcement team and this new group, what this will provide is is local prosecutors who are

familiar with this type of crime and that are able to assist in working on these type of cases. So it gives them a much better national presence. I think the Secret Service is also working on making sure that there will be people in all places in the United States that are equipped to handle with this. I think it's as far as my involvement, that's all a different sphere than I run in because that's all on the Fed level. My sphere is all about how can we get states and locals to talk to each other and get educated as well. And what I love is that the feds have a means of communicating among themselves that we didn't have, is why I developed that coalition of like let's let's local and state have a have a opportunity to

communicate and to help each other. That's something I found really lacking. All right. So for any of my listeners who either have fallen victim to such scams or are worried about doing so, what tips would you offer them? So the tips I would offer are definitely report to IC3. Now what don't expect to hear back from IC3, but that is a national data collection location where people will be looking at how those cases are occurring on a national basis. That's a good place. They should call their local service, they should call their local secret service. Their local secret service should be equipped to respond to a case like this. And they should, they should attempt to report to their local law enforcement. Now, that's a,

If none of those are working or they are frustrated with the situation, I'm happy to try and work with them and find them an appropriate home for their case. So I'm easy to find on LinkedIn. I'm Erin Nordby West, and I talk about this stuff all the time. To me, this is the most important thing is that victims get heard. And if I wasn't clear enough about that, what I will say is that in talking to some of these victims who have waited five months to talk to a live person about what happened to them, they're now saying things like, it's not even really the crime anymore, it's that nobody is listening to me, that nobody is taking this seriously what happened to me. And with a number of the victims that we've helped and we found that there really

wasn't any recoverable funds, they were glad just to have had someone look and to give them a definitive answer so that they can stop worrying about it. And if I can say one more thing about that, and another really dangerous place that these victims go is they then get re-scammed when they go out to asset recovery firms who are making false promises about what they can recover for them. And that's a whole other story about victims paying recovery firms to do the tracing that law enforcement should be doing for them. That these recovery firms don't have the legal ability to ever seize any of these assets. So these false promises are giving victims a hope that they're not going to be able to meet. Wow. Okay. And then so for people who maybe aren't yet victims or who hopefully will

never be, but I mean, just what tips do you have for people to generally be wary and protect themselves? Yeah. I think that, you know, it's for a lot of people who are feeling lonely, it's really nice to make some sort of connection online. And I would just really caution people to be wary of where those, where those initial conversations are going. And if there is talk of cryptocurrency, you know, a dear friend of mine from childhood reached out to me and told me about this. He started talking to this woman. It had been about three weeks that he had been talking to her. And, you know, and then she was saying, she started mentioning cryptocurrency. And it's just those should be red flags. There should be red flags that occur to you now. When people start talking about cryptocurrency, you should just be wary.

If anyone ever asks you to put money in a Bitcoin ATM, there's just really no legit reason you would ever be asked by anyone of any authority to put money in a Bitcoin ATM. All right. Well, this has been a really, really illuminating episode. And thank you for your work because, you know, just like I said, from what I read about these scams, they're really ones that, yeah, just prey on people's kind of emotional vulnerability and are, yeah, frankly, just extremely exploitative and heartless. So, you know, I think they all appreciate work, as do I.

So where can people learn more about you and the work that you're doing? Well, like I said, I'm on LinkedIn and I'm always talking about pig butchering and the scams that I'm seeing. And I hope I provide an interesting perspective because I talk about literally what's happening right now and what I'm seeing and where things are going. So LinkedIn is a good place to find to Aaron West. And if you need help, I work with the React Task Force in Santa Clara County, California. And we are findable in Google. Well, perfect. It's been a pleasure having you on Unchained.

Thank you so much. I really appreciate it. Thanks so much for joining us today. To learn more about Aaron and Crypto Scams, check out the show notes for this episode. Unchained is produced by me, Laura Shin, without from Anthony Youen, Mark Murdoch, Matt Pilchard, Zach Seward, Bonaranovic, Sam Shree Rum, Pam, are Shoshank and CLK transcription. Thanks for listening.