How ethnic Chinese women are preyed upon by crypto scammers

Qiao Er was idly scrolling through Douyin, the Chinese version of TikTok, on a hot summer day in the southern Taiwanese port city of Kaohsiung when she came across the profile of a wealthy and attractive Chinese man.

She liked a few videos, clips of him playing tennis, driving around in a Ferrari, and feasting on a Hummer the size of a child's bicycle.

Then the unexpected happened. A message from the stranger appeared in Qiao Er's inbox, sparking a months-long online romance that would leave her bankrupt and heartbroken.

Across the Chinese-speaking world, thousands of victims like Qiao Er are losing their life savings to cryptocurrency fraudsters who have nimbly adapted to authorities trying to crack down on the so-called "pig slaughter" scam in which victims are "fattened" through online romances.

In London, New York and Kaohsiung, the Financial Times spoke to three women who said they collectively lost more than $2 million to fraud.

With an estimated 80 million ethnic Chinese outside of China, Hong Kong and Macau, including millionaire business owners, fraudsters have plenty of scope for new targets after Beijing imposed a domestic ban on cryptocurrency investments.

The pandemic provided a useful shield for scammers to build relationships with women while using the excuse of travel restrictions to explain why they couldn't meet in person. Booming crypto prices also helped lure them into the scam.

"It starts with an online relationship, scammers 'fatten' their victims with romantic messages and groom them on social media," says Jan Santiago, deputy director of the US-based Global Anti-scam Organization, a nonprofit group that supports victims of cyber investment crimes.

Two weeks after Qiao, a CCTV operator at a security company, met the soft-spoken stranger online, they began calling each other husband and wife, spending hours on the phone and texting throughout the day, she says. They even chatted via video, but a supposedly broken selfie camera obscured the scammer's face.

“They wait until you fall in love with them with their romantic words before they start stealing your money,” she says.

They wait until you fall in love with them with their romantic words before stealing your money

It wasn't long before he started teaching her how to invest in crypto so she could live the same life he modeled on his social media. This happened towards the end of 2020, when Bitcoin started climbing to new highs and even the most novice investor could make easy returns.

“He told me exactly when to buy when the price was low and when to sell when the price was high,” says Qiao Er.

The fraud committed against the three victims followed the same pattern. The scammers asked the women to buy crypto on established exchanges before asking them to switch to fake websites that sound legitimate to the crypto newbies.

Taiwan's National Police Agency publishes a monthly list of suspected fraudulent sites reported by victims, with names such as "KrakenCoin" and "Coinbase CCY" that mimic the names of real exchanges. Both sites have since been shut down, which experts say is a common practice after being reported by victims.

The websites listed by the police have all the hallmarks of a legitimate trading platform: 24/7 online customer service and live charts of coin price fluctuations. The women could initially withdraw some assets in fiat currency, enticing them to trust the platform.

The scammers used the online relationship to get an idea of ​​the women's finances and inquire about their weekly salary or the value of their cars and houses. They encouraged friends and family members to get involved in the program by promoting elaborate flash coin sales and special offers.

Qiao Er eventually transferred all of her savings to an exchange website called Citi.mt4. She said when she tried to withdraw some money to pay her bills, customer service demanded a hefty tax to withdraw the money.

She says the man she met on Douyin suddenly became bad-tempered and ordered her to borrow money from her family, friends and the bank. When those avenues dried up, he urged her to borrow against her car and then go to loan sharks.

She made losses totaling $88,870 before one day the website Citimt4.com suddenly disappeared, along with the man she had been calling her husband on social media for months. She reported the crime to local police, who told her that the chances of getting her money back were very slim.

She showed the FT screenshots of the website, which included a banner claiming it had regulatory approval. The FT later found no trace of the website online. The Kaohsiung City Government Police Bureau declined to comment on Qiao Er's case.

Liao Jiankai of the Taiwan Criminal Investigation Department, whose team compiled the list, said the Citi.mt4 website had the "characteristics" of being designed by a fraud group, pointing to the fake winning numbers displayed on the homepage.

He says Qiao Er's scammer's tactics were typical of other cases. "Initially, the victims invest a small amount and earn returns, so they think it's real. Then the scammers find ways to make as much money as possible from them. When the victim tries to withdraw the money, the website requires them to pay taxes or a deposit before closing," explains Liao.

Among the sites on the police list is Metachain - to which Monica, a London-born woman in her 50s, transferred £1.5 million over the course of a year under the guidance of a fraudster she met on Instagram.

A former business owner, Monica began investing in 2021 when rising Bitcoin prices helped scammers convince their victims that they could get rich quick. "I've never met this person, so I was suspicious when he told me to invest. But he kept telling me that he would come to London when the pandemic was over," says Monica, not her real name.

In the beginning, victims invest a small amount and earn returns, so they think it is real

Monica has reported the alleged crime to London's Metropolitan Police, but has little hope that the British authorities can help. In an email communication seen by the FT, Monica was told by police that "it is incredibly difficult to detect [the crimes] due to the fact that they are carried out remotely".

The Financial Times reached out to Metachain's customer service for comment on the claim that it is a fraudulent crypto exchange. Customer service replied: “Don’t worry, we are registered in Hong Kong so you can invest with us,” before blocking any further communication.

Michael Tang, a New York-based lawyer who represents U.S.-based Chinese clients, says the tactics to manipulate Monica into investing are typical of techniques first honed by criminal gangs in China.

Leaked Chinese-language manuals for scammers highlight how they play on human psychology to trick victims. A guide that euphemistically refers to victims as “clients” advises scammers to facilitate crypto investments for them by pretending it is a game they can play together. “Tell the customer that you are bored, that you want to play a game with them that will allow them to make some money,” he advises.

Beijing began cracking down on crypto fraud in 2017 and eventually took the radical step of banning cryptocurrencies altogether. Chinese police began rounding up criminal gangs and warning citizens about crypto scams. The campaign forced many gangs to flee to new hideouts in Southeast Asia, where they targeted victims outside mainland China. Tang says he has seen a significant increase in ethnic Chinese victims in the U.S. seeking his help in reporting their cases to the FBI over the past year.

The gangs use technological shields to evade authorities and go through SIM cards and websites to avoid detection.

The Federal Trade Commission says people have reported losing $1.3 billion to romance scams in the last five years, surpassing other scams. In 2021, reported losses reached a record $547 million, an 80 percent increase from the previous year. Experts say the huge flood of cases has overwhelmed crime-fighting authorities. With few official resources at their disposal, victims often have to take matters into their own hands.

Kelly Wang, a New York City nurse, lost $231,000 after a scammer posing as a successful Taiwanese businessman tricked her into investing in a crypto scheme.

She decided to confront the scammer, a man she had spoken to for months on WhatsApp messages and on the phone. Then she discovered that her scammer was also a victim of a scam like she was.

Carrying out the scams requires a large workforce - from website engineers to 24-hour customer service representatives.

When Wang confronted her scammer on WhatsApp, he asked her for help, claimed he was being held against his will in Cambodia and asked her for money to help him escape.

The FT saw the WhatsApp messages he sent but was unable to authenticate the claims he made. However, his story is consistent with evidence of large Chinese-run fraudulent factories raided by Cambodian police. Wang reported the crime to the FBI.

A popular destination for migrating fraudsters is Sihanoukville in southwest Cambodia, also known as the “Macau of Southeast Asia,” where a thriving casino industry is run largely by Chinese entrepreneurs.

In 2018, Preah Sihanouk provincial governor Yun Min warned that Chinese investments had "created opportunities for the Chinese mafia" - including kidnappings, leading to "insecurity" for the region.

The problem has become so endemic that Chinese authorities have warned of human trafficking groups luring victims to Cambodia with the promise of fat salaries. Authorities advise citizens “who want to work in Cambodia to follow formal channels and not believe in false advertisements for high-paying jobs.”

In September 2021, a joint Cambodian-Chinese police task force busted a 200-person fraud complex in the capital Phnom Penh. Local media reported that most of those arrested were from China's Yunnan province.

Experts say these high-profile raids haven't eliminated the problem: scammers' tactics have become more sophisticated in recent months, targeting less visible corners of the digital asset market.

Back in Kaohsiung, Qiao Er's emotional wounds are slowly healing. The crypto scam triggered an avalanche of debt that turned her life upside down.

She was asked to quit her job at the security company after creditors began stalking her at work. The plan destroyed her relationships with family members who had lent her money. After she was kicked out of her family home, she had a brief period of sleep.

But Qiao Er is rebuilding her life: she has found a new job and a boss who cares about his employees. She has joined a support group with other Taiwanese victims who share their experiences. It has blocked all private messages from unknown accounts and added a layer of digital protection against scammers looking for new victims on social media.

“I'm rebuilding my confidence,” she says, adding that she's speaking out so others can learn from her experiences. “There are people who have it much worse than me.”

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