For two weeks last year, Sophie, a successful businesswoman and mother from the north of England, was hospitalised after collapsing when she lost a quarter of a million pounds in a cryptocurrency scam.
Like many victims of a sophisticated cyber racket sweeping the globe, she does not want to be identified out of a misplaced sense of shame. Her name has been changed as family and friends are still unaware she lost almost her entire life savings through the fraudulent scheme.
“It was like being brainwashed. It still pains my heart,” she told The Telegraph, adding that she knew of others who had lost hundreds of thousands of pounds. “We are all good at our own business but in that precise moment we were brainwashed. You’ve been clever all your life, trying to look after the money you have and eventually lose to a scammer.”
Thousands of savvy crypto investors have been caught out by the “liquidity mining” scam, which deploys a tactic known as “pig butchering” – where victims are emotionally manipulated and their accounts fattened before being drained.
To date, the largest known amount swindled via this fraud was $8 million, belonging to Divya Gadasalli, 25, from Texas, who lost her family fortune last year.
The scam has been so widespread that the FBI issued a statement last July warning that hundreds of American cryptocurrency investors had been scammed out of $42.7m by cyber criminals using fraudulent cryptocurrency investment apps.
The US Federal Trade Commission estimated that Americans lost $750 million to crypto scams in 2021.
British authorities are also on the case. Last week, the National Crime Agency launched a new unit aimed at tackling a surge in digital assets fraud, with a total of £226m lost to cryptocurrency scams between October 2021 and September 2022, according to Action Fraud, the national reporting centre for fraud and cybercrime.
But activists believe the financial global toll could already be running into billions. Victims stretch from the UK, Europe, Asia and the United States to South America and Africa.
Trafficked into a ‘scamdemic’
In many cases, global law enforcement agencies are powerless or do not have the resources to intervene. No one agency has the authority to deal with a new crime of such staggering dimensions, and regulators are still catching up.
The scale of the criminal operations, largely run out of Southeast Asia, has been dubbed a regional “scamdemic”.
Most of the scammers are located in “special economic zones” in Cambodia, Laos and, increasingly, on Myanmar’s border with Thailand – a lawless area that appears to be ruled by Chinese triads and insurgent groups, empowered by the pandemic and a 2021 military coup that caused deep turmoil.
Many are victims themselves – Asians, Ukrainians, South Americans, Africans lured by the prospect of a well-paid job in Thailand, only to be trafficked by armed gangsters across the porous border and imprisoned in vast industrial compounds, left fearing for their lives.
Sophie later discovered her scammer was located in a reportedly jail-like enclave known as “KK” on Myanmar’s eastern border. After conning her out of her savings, he took the unusual step of contacting her again because she had been so devastated.
“He said ‘I am risking my life to contact you because after we scam people then we are not allowed to contact old clients [victims] again’,” she revealed. “If his company found out then he would probably be buried.”
They initially came into contact last January via social media and for months Sophie believed she had found a new friend. He said he was originally from Guangzhou in China but was now based in London. He declined to meet in person, citing Covid-19 as an excuse.
For four months he never once mentioned money as he built up her trust and friendship.
But in April, he suggested doing a crypto investment together and Sophie decided to go ahead, feeling secure that she had her own Coinbase account.
‘Money in my account turned to 0’
However, she was sent a link to a convincing, fake website – known as a smart contract – that contained technology that gave the scam gang a backdoor into her account.
“On the last day of April, after making a few trades in crypto, I was trying to transfer some money to my own bank but when I tried to withdraw money, my account emptied,” she said.
“I watched as the money in my account turned to 0,0,0,0 within two seconds. My brain was on fire, and I started to google everything about coinbase liquidity mining. Then I knew I’d been scammed,” Sophie added.
“I didn’t sleep for one week and I went to hospital because of low blood pressure and stress. I couldn’t stand up because most of my savings were gone. I went through the hardest time in my life for past six months,” she said. “I was mentally in pieces for months.”
After seeking help via the Global Anti-Scam Organisation (GASO), an activist and victim support group, Sophie opted to glean more information from her scammer, to try to warn others of the dangers.
She passed on the details to law enforcement authorities, but there is little police agencies can do alone in a foreign jurisdiction, particularly in a region with poor law enforcement.
The cryptocurrency acquired via the scammers is quickly switched to hard cash, in particular Thai baht, and becomes untraceable.
What Sophie learned, chilled her. Her scammer claimed there were about 16,000 others living and working in the compound, fixated on their computers for 18 hours a day, hunting for victims all over the world – many of them hoping to buy their freedom if they earned enough.
He told her eight to 10 scammers in one group would deal with each “client,” drafting out a script to gain their trust and using psychological methods to manipulate them.
“There is a common saying by the scammer’s company: ‘there is no one who can’t be deceived, only scripts that don’t fit’,” she said.
The scammer’s claims that his own life was in danger have been backed by multiple reports of Chinese, Taiwanese, Vietnamese, Indonesians, Malaysians, Filipinos and Thais being deceived by fake job offers and taken against their will to industrial zones in Myanmar, Cambodia and Laos described as mass prisons.
More recently, Kenyan, Indian, Pakistani, Brazilian, Eastern European and Ukrainian citizens have reportedly been targeted by the gangs, eager to exploit their English-language skills to diversify scams into new regions.
The United States Institute of Peace, which has been tracking the explosion of human trafficking and proliferation of criminally run zones in Myanmar and across Southeast Asia, has called it a “growing threat to global security.”
It estimates that crime networks in Cambodia alone have drawn 50,000 to 100,000 people into slave-like conditions.
The institute believes that in Myanmar, the number could be two to three times higher, and pointed to the “particularly sinister” enclave called the KK Zone, located on the Moei River.
“By one account, as many as 10,000 people are enslaved there, tortured or, according to some accounts, threatened with having their organs harvested if they fail to generate adequate revenue from operating scams,” said USIP in a November report.
The UN Office for Drugs and Crime (UNODC) has long warned of the rise in criminal activity in the Mekong region and in the so-called “Golden Triangle” – the area where the borders of Thailand, Laos and Myanmar meet.
Disrupting organised crime syndicates
Last year it estimated tens of thousands of people were trapped by scam gangs, but the UNODC’s Jeremy Douglas acknowledged the region “hasn’t really got a sense of the scale of the trafficking, except that it is obviously massive.”
“A regional response is fundamental,” he said. “Pressure applied in one country will see them [the syndicates] shift to another,” he said.
“The region really needs to disrupt organised crime syndicates and take away the conditions they use and look for to do business – if they don’t, not much will change.”
Last year, Stephan Wesley, 29, a graphic designer from Tamil Nadu, India, found himself trapped inside a large compound in Myanmar surrounded by electric fencing and guarded by armed henchmen, when he applied via social media for an attractive $1,100 a month job in Thailand.
The recruitment process was elaborate and persuasive, starting out with an interview in the Dubai Investment Park, before new recruits were flown to Bangkok and given a tourist visa but promised a one-year work permit. They were then driven to Mae Sot, a border town in northwest Thailand.
“We were made to wait outside a hotel and two Thai people came, armed with big guns. They took our luggage and made us get into a truck,” Mr Wesley told the Telegraph.
“They took us deep into the dark forest and local people came and took us to a river which I now know was the border with Myanmar. There were no fences or army personnel there.”
When they arrived at the compound as illegal immigrants to Myanmar, their phones were taken.
“We didn’t know what was happening, but we were so scared. There was no option to escape, the camp was run by the Chinese mafia. We did what they told us to do, we were slaves,” he said.
Mr Wesley was made team leader of eight other captive Indians. Their task – to pretend to be young attractive Thai women on social media and try to persuade people to invest in a fraudulent cryptocurrency app.
“Mainly, we would target people over the age of 55. We were given SIM cards from around the world so the person we were chatting to thought we were in their country,” he said.
The consequences for underperformance were severe.
“If we didn’t hit our monthly targets, they would punish us. They would use electric shocks and touch it on your skin, and they would beat you,” Mr Wesley said. “Everybody was scared. Every day it was like hell, and we couldn’t escape.”
The group finally managed to contact their families, who persuaded the Indian government to pressure the Myanmar military to rescue them.
Others have tried to buy their way out. James Buchan, a seasoned crypto investor who runs an office renovation business out of Essex, said he recently attempted to help a woman from Hong Kong escape from captivity.
He had become aware of the scam gangs when he was conned last year out of about $100,000 by a different woman who contacted him via Facebook and initiated a casual conversation about crypto and liquidity mining. He said she was never pushy.
In legitimate liquidity mining operations, investors stake their cryptocurrency in a liquidity pool to provide traders with the liquidity necessary to conduct transactions. In return, the investor receives a portion of the trading fees.
But Mr Buchan was unaware that – like Sophie – he had linked his cryptocurrency wallet to a fraudulent liquidity mining application, which contained a hidden smart contract giving the scammers permission to withdraw funds from his account.
When he became suspicious of the investment and tried to transfer his money out, it disappeared. His scammer told him to call customer services, who advised him to put the same amount of money in to release his earlier funds. He never did.
“I’ve written the money off for now and moved on,” he said. “I don’t consider myself stupid. I run a decent sized business in the UK. Anything that is too good to be true, I consider too good to be true. They are just so convincing, unbelievably good at what they do.”