One study estimated that as much as US$75-billion has been lost to pig butchering scams globally since 2020.celiaosk/iStockPhoto / Getty Images
Financial scams are not new. But technological advancements and the rise of cryptocurrencies have made them difficult to spot unless you know what to look for. Financial advisors can act as the first line of defence in protecting their clients.
One form of fraud in particular, known as “pig butchering,” has become prevalent in recent years. This scam involves online criminals gaining a client’s trust and eventually selling them on an investment opportunity, often in cryptocurrency.
The client then sends money in hopes of earning an abnormally high return, and things seem to go well initially. But as the pig in this analogy, the client is oblivious to the fact they’re being fattened up for the slaughter. Communication dries up, the websites go offline, and the money is gone.
One study estimated that as much as US$75-billion has been lost to pig butchering scams globally since 2020, while another found that revenue from these scams was up about 40 per cent year over year in 2024.
In Canada, fraud victims reported $648-million in losses to the Canadian Anti-Fraud Centre last year, a figure that likely represents just a fraction of the actual fraud that occurred, and the Ontario Securities Commission has warned about a massive surge in online scams.
One such example hit quite close to home recently. My neighbour called me because she believed her father was being scammed. He had deposited about $100,000 – virtually all his retirement savings – into legitimate crypto wallets. He then sent that money to various “investment firms” in exchange for promises of high returns and no risk.
I offered to sit down with her dad to learn more and see if anything could be done to retrieve the funds.
It all started with an advertisement he saw online. The ad showed Prime Minister Mark Carney discussing a generational wealth opportunity in artificial intelligence and cryptocurrency, one he encouraged all Canadians to invest in.
The problem is the ad was fake. It was not Mark Carney, but an advanced “deepfake” – an AI-generated video that was almost indistinguishable from the real thing.
After watching the video, my neighbour’s dad immediately began searching online for this investment opportunity, using keywords such as “Carney cryptocurrency investment.”
Searching online led him to dozens of fraudulent websites promising high returns with no risk. He signed up for several accounts in exchange for his name and phone number. Once signed up, he started receiving text messages via WhatsApp, providing instructions on how to set up legitimate cryptocurrency wallets and then transfer those funds to the fraudulent investment company. In one case, they even conducted a live video chat in which he shared his screen with the scammers, who walked him through the process.
Once done, he was able to log in to his account and see the profitable “trades” this firm was making on his behalf. In a matter of months, the account was up by more than 50 per cent, and the scammers were contacting him, encouraging him to invest more money, which he did.
Of course, none of these trades had actually taken place. A quick search of historical prices for these cryptocurrencies, cross-referenced with the dates they were allegedly traded, shows the trades couldn’t be real. But scammers prey on people who aren’t likely to do that research.
Eventually, after encouragement from his children, he asked to withdraw his money, including his profits. He was told that to do so, he would first have to deposit even more money to cover their “fees.” At one point, the scammers even began insulting him for wanting to withdraw his money when the strategy was so profitable. At this point, they were messaging him multiple times a day.
In the end, we were able to recover only $5,000 – the money he was about to send from his legitimate crypto wallet to the scammers in hopes of finally being able to access the rest. The saddest part is that his intention with this investment was to give some of the money to his other daughter to help her purchase her first home. Instead, he lost it all.
The victims of these scams often feel deep shame. Many think they’re only one additional deposit away from getting all their money back, and that they’re too smart to be taken advantage of in this way. Unfortunately, that makes it harder to accept the money is gone.
Despite filing a report with the RCMP, my neighbour’s father was told these scams are difficult to unravel, are often run by foreign organized crime syndicates, and offer virtually no recourse. The money is gone, and there’s nothing he or the police can do about it.
All the red flags were there:
- promises of exceptional returns
- high-pressure sales tactics,
- companies registered overseas while claiming to be Canadian,
- the inability to withdraw money without sending more,
- and communication via encrypted methods such as WhatsApp.
Still, unless you know what you’re looking for, those red flags can be mistaken for an opportunity that’s too good to pass up. Most financial professionals should recognize these red flags immediately. If my neighbour’s dad had a trusted advisor to talk to, the entire thing would likely have been avoided.
Unfortunately, for him, it’s a lesson learned too late.
Advisors must be proactive to prevent their clients from falling victim to fraud. That means staying informed about the evolving red flags of financial scams and psychological manipulation. They should also have an open, judgment-free communication process that empowers clients to bring these matters to their attention before the client acts.
Through communication and vigilance, advisors can become the ultimate firewall between a client’s life savings and a devastating loss.
Mark McGrath is the founder of Phynance, a fee-for-service financial planning firm focused on physicians. He’s based in Squamish, B.C.