Beware Of Crytpo And Forex Scams

For a long time I had resisted creating this page.
With the end of the COVID lockdowns, I had hoped that investment themed scams such as cryptocurrency and foreign exchange trading had run their course.
Instead, stories of people losing large amounts of money in investment themed scams appear to be accelerating.
I understand all too well that you might be under financial pressure.

Empathy

The intent of this introduction is to acknowledge that you may have led a responsible life and yet you may still be under significant financial pressue.
You may have a paid off car you bought several years ago and a paid off home purchased many years more ago.
With zero debt you might still have the monthly expenses listed below:

Without trying especially hard I got close to $2,000 a month as the cost of simply existing without even including groceries.
Your income might be limited to social security.
Over the course of your life you may have accumulated a few tens of thousands of dollars in savings.
That would leave you in better condition than many people but you might still feel like you are under financial pressure.
Even if the above does not describe you, it might describe a family member.
Often victims of online investment scams are lured by simple greed, but other times they are lured by a futile attempt to help make ends meet.
I have no magic bullet with which to help you meet your financial goals, but I can tell you that falling for some online investment scam will only set you back further.
This page will focus on understanding and avoiding The Pig Butchering Scam.
An attempt at a Pig Butchering Scam might begin with for example any one of the following:

• Dating Website
• Direct Message On A Social Media Website
• Public Post On A Social Media Website
• "Wrong Number" Text To Your Phone
  Note the quotation marks.
  Those are important.
  While calling or texting a wrong number can happen, pretending to having texted the wrong number is now part of a very common scam.
  If you reply to the initial text, the scammer may say something about fate having brought you together and that as such you should continue contacting one another.
  Spoiler Alert: You should not continue communicating with the scammer.

The scammer may be content to play the long game: it may be hours, days, weeks, or even months until the scammer pivots the conversation to the underlying scam.
You may have a family member that has fallen victim to The Pig Butchering Scam.
Regardless of whether you find the information on this page to be too simplistic or too complicated, this page is far more grounded in reality than any online investment scam.
Instead of saying "don't worry, trust me" I am going to walk you through the concepts and the numbers.

​Pig Butchering Scam

The Pig Butchering Scam is an example of a romance scam.
The name is not something that I made up.
It is an accepted name used on the internet.
If you are a man, unless you experienced extreme popularity from a very early age onward, regardless of your conduct at some point in your life a woman felt the need to spontanetously blurt out "I've got a boyfriend."
You might reply "Um ok, well I have initialed that I am waiving the insurance for the rental car. Hand me the keys and I will be off."
Maybe the woman at the rental car agency does have a boyfriend or maybe she doesn't.
In either case, she has decided that it is important to communicate that she is not a possible romantic partner for you.
In contrast to the scenario above, the Pig Butchering Scam begins with someone implying that he or she is romantically available.
As this particular scam progresses, the scammer will try to convince the potential victim to engage in some kind of investment activity.
The investment activity will be a scam.
On this webpage I will try to explain just how ridiculous the premise of the Pig Butchering Scam is.
If you carry a balance on your credit card, there is a strong chance that the interest charged will be 20% or more.
Perpetrators of the Pig Butchering Scam expect you to believe that far greater returns are somehow guaranteed.
If it were possible to make the returns that scammers allege are possible, would your credit card issuer be content to loan you money at 20 or even 30%?
I have heard credit card companies called a great many things, but charity is not among them.

​Hallmarks Of The Pig Butchering Scam

Below are some common hallmarks of the Pig Butchering Scam:

• Off-Platform
• Fake Trading Websites
• Testimonials
• Being Told That You Will Be Copying Someone Else's Trades
• Impossible Claims
• Recovery Scammer

I will address the Off-Platform, Impossible Claims, and Recovery Scammer hallmarks later on this page.
In addition to impossible claims, a common attribute of fake trading sites and fake internet retail sites is a website name that has only been registered recently.
I will address looking up website creation dates in a page later in this series.

​Off-Platform

Online scammers have become aggressive to the point that scammers will sign up for paid accounts on dating services.
Between the time when scammers create their accounts and the time their accounts get closed for trying to scam people, scammers will try to move conversations off of the dating platform.
The length of time between when a scammer's account gets created to closed could range from a few hours to a few days.
Some websites tend to side with the scammers, so the profile will stay up as long as the scammer wants.
During the Covid lockdown I did a trial on a dating site.
I quickly received a flood of messages asking me to go off-platform:

In the interest of brevity, I cropped the graphic above down to a few but if I included them all you would have needed to scroll for a while to get past them all.
As much as I would like to believe the text of my profile was so incredibly compelling, it was likely overwhelmingly people looking to scam me.
Out of roughly 50 such messages such as the above graphic, I would like to think that one of them was someone that actually intended to have a long-term relationship with me, but perhaps not even that.
The first three or four I replied back to only wanted to communicate off the site.
After that I gave up.
Had I chosen to play along, most of them would likely have been the Pig Butchering Scam.
Scammers running the Pig Butchering Scam will typically pose as an East Asian man or an East Asian woman.
The scammers may or may not be the gender, ethnicity, and age that they present in their profiles.
If you go to a restaurant such as Hooters, your waitress might engage in flirtacious banter in order to maximize her compensation.
Regardless of such banter, unless you are a prominent celebrity, your waitress does not want to date you.
However, your waitress does exist.
The food may or may not be good, but it does exist.
In contrast, usually the photos that scammers use will be of someone else.
You may even be shown video of someone else.
Let's say you understand that the communication is an attempt to scam you but you believe that the photos are actually of the person communicating with you.
If there is something that could make a man less attractive to a woman than that man being bad with money, I have no idea what that would be.
Even should the photos and videos presented to you actually prove to be of the scammer, your scammer does NOT want to date you.
The scammer only wants to scam you.
It is right there in the name.

​Fake Trading Websites

Eventually you will be asked to use a trading platform.
On the internet just as in politics, the person who will get the most traction is the person that can lie most convincingly.
To try to compete with such lies, my page has some minor mouse-over effects.
The scammer may create testimonials on its own websites and on other websites.
If fraudulent testimonials are to be shown on the scammer's fake trade site, then it is easy enough for the scammer to type those directly on the website files and upload those to the webserver.
The scammer will also display content suggesting large past, present, and future gains.
Spoiler Alert: The testimonials, whether on or off the site, are fictitious. The same goes for trading gains.
Testimonials may be planted on social media sites using accounts that the scammer has hacked.
If that is not disturbing enough, scammers may even get victims to make video testimonials by telling the victim that their accounts will be returned if they comply.

​Impossible Claims

Scammers will lure victims with claims that defy logic.
The claims that scammers make often range from 10%, 100%, to 1000% per day.
In this section I will assume a far smaller rate of 1% per day.
I will use an Excel spreadsheet as a tool to explain how ridiculous even that premise is.
I would be happy to provide you with the spreadsheet I will be presenting so that you could manipulate it on your own, however I do not want you to get in the habit of downloading Microsoft Office files from people that you do not know.
I will present you with a graphic of the spreadsheet and information on how to enter data.
The spreadsheet will walk you through how growing your principal by 1% day one, then taking the new value and growing it 1% each day would grow to more than 10 times the initial value in 240 days.
Why did I choose 240 days?
To lower the bar for what the scammer says is possible, I will assume the "mystery" trading technique only works on weekdays, then I deducted a bunch of days from the weekdays for holidays.
The scammer will likely allege that they will be trading one or both of:

• Cryptocurrency ( Crypto )
• Foreign Exchange ( Forex )

In either case, it is complete nonsense.
I have acquaintances that have worked in foreign exchange trading.
Most of them happen to be women.
I would love to invite one or more of them to do a YouTube video with me in which together we would explain how ridiculous the idea of making money trading currencies is.
Anyone actually working in trading foreign exchange would find the lunacy of a retail investor consistently making money trading foreign exchange to be more self evident than the truths in the preamble to the Declaration of Independence.
As such, if I asked any of those women to help me explain to people how to avoid forex scams, those women would absolutely interpret my invitation as an unwelcome social or romantic solicitation.

​Formula Approach

In rows 1 and 2 I will use a formula to show how the compounding would work.
Cells A1 through E1 are labels.
Cells A2 through E2 show how to compute the final value using formulas.

​Brute Force Approach

Some people may not find the formulaic presentation convincing.
Rather than being insulted, I am actually completely fine with that.
Being skeptical is the point of this web page.
For the sake of expediency, rather than walk you through the formulas I will show you an alternative method using more of a brute force approach in rows 4 through 244.

1. Enter the values in the table above for each cell address from A4 through C6
2. Right-click on cell C6
3. Select Copy
4. Right-click on cells C7 through C244
5. Select Paste Options: Paste (P)
   Depending on your version of Excel, the text in bold above may or may not be slightly different.

Excel Note: Absolute Versus Relative Addresses

When you copy formulas from one cell to another, by default Excel will adjust the cell addresses being copied.
In the table above, you will see how Excel automatically adjusted the row numbers after the C.
That is what we wanted to happen.
Cell address B5 contains the number 1.01
We do NOT want references to B5 to change when we COPY/PASTE.
You will see that where I reference cell B5 I put a dollar sign before the B and before the 5.
To prevent references to B5 from being changed when we paste, in our original formula that we are copying from we put a dollar sign before the B and the 5.
That tells Excel to use what is called an Absolute Address.
The numbered instructions above do not involve copying from cell C5, so we did not actually need the dollar sign before B and before 5 in cell C5.
Sometimes when running a military organization or a household, it is easier to make a blanket rule than it is to point out the exceptions.

​Exercises

Exercise 1: Understanding Compound Growth

The goal of this exercise is to highlight the sheer absurdity of crypto and forex trading scams that are common on the internet.
Using the formula based approach, what would $10,000 grow to over 8 year with compound growth of 1 percent per day?
As in our earlier examples, we will limit number of days to 240 per year.
Unless you are already familiar with this material, the answer may surprise you.
I am familiar with the material and it still surprised me.

Exercise 2: A Centless Exercise

In this exercise, we will explore the contribution of pennies to the amount of growth.
Using the brute force based approach, if we completely removed all pennies in the account at the end of each day, what would $10,000 grow to over 1 year with compound growth of 1 percent per day?
Assume 240 days as in the prior examples.
In my solution for exercise 2, I will not be rounding the pennies up or down to the nearest dollar.
I will be completely removing them.
Why am I removing the pennies?
To show that even if the scammer says that his strategy only works with whole dollars, the returns are still impossibly large.
If you want, you can google for how to solve this or you can directly click the Exercise 2 Solution button to show the solution.

Exercise Review

We have gone over 2 exercises to exlpain the lunacy of the math behind internet investment scams.
In order to model whatever trading strategy a given internet scammer is pretending to use, I have restricted a year to 240 trading days.
In exercise 2 we removed the pennies at the end of each trading day.
I added the logic regarding removing pennies in case some internet scammer says their particular imagninary trading strategy only works with whole dollars.

​Fees And Taxes

Either a given victim did not read my web page or he read my web page and decided to believe a scammer instead of me.
The scammer's website may show that the victim has made some large amount of money.
The scammer may ask that some processing fee or tax be paid before the profits can be withdrawn.
Initially the victim may think that the extent of the scam was asking for the fee or tax, not having yet caught on that everything was a scam from the beginning.

​Recovery Scammer

Eventually the victim will begin to catch on that he or she had been scammed.
He or she may then be contacted by one or more Recovery Scammers.
A Recovery Scammer is someone that represents that he or she can recover the money last in an earlier scam.
The Recovery Scammers may or may not be affiliated with the original scam.
Just as the original scam may have had testimonials, the recovery scammer may also be promoted with testimonials.
Spoiler Alert: Just as with the initial scam, the testimonials were almost certainly planted by the recovery scammer himself.
Just as the original scammer made impossible claims regarding investment gains, Recovery Scammers or their proxies will make unfounded claims of being willing and able to recover your money.
Any money that you give to a recovery scammer will be losses in addition to your original losses.

​My Takeaway

My dream is to own some kind of beachfront property.
Should that dream become a reality, depending on location I might be paying for it in dollars or I might be paying for it in Euros.
Under no circumstance will Bitcoin or any cryptocurrency be part of the transaction.
Maybe you already own a paid off beachfront condo or townhouse.
If so, you might look at the theoretical expenses I listed at the top of this page:

• Condo Monthly Fee $550
• Condo Special Assesment $150
• Property Taxes $375
• Home Insurance $150

laugh and say that you wish your expenses were only that high.
If monthly cash flow is tight, the right answer for you might be to downsize to a less expensive home further from the coast.
I can't guarantee you that the next hurricane will not leave the beachfront home unscathed while destroying the home further away.
However, I can tell you that giving your money to an internet scammer will end in tears.