Crypto fraud: Criminals leverage “As-a-Service” business model with Sha Zhu Pan Kits

Global leader in innovating and delivering cyber security as a service, Sophos, has unearthed an increasing trend where cybercriminals have adopted the use of sha zhu pan to scam potential victims across the world.

A two-year investigation by the firms has revealed how scammers involved in elaborate, romance-based cryptocurrency fraud are leveraging a business model similar to cybercrime “as-a-service” by selling sha zhu pan kits on the dark web which has enhance globally expansion of the criminal activities.

“When pig butchering first appeared during the time of the COVID pandemic, the technical aspects of the scams were still relatively primitive and required a lot of effort and guidance to successfully scam victims. Now, as the scams have become more successful and the fraudsters have refined their techniques, we’re seeing a similar evolution to what we’ve seen with ransomware and other types of cybercrime in the past,” said Sean Gallagher, Principal Threat Researcher at Sophos.

Sha Zhu Pan which is also known as pig butchering in the cyber security world involves the luring online and urging them to invest in cryptocurrency on a compromised platform they control before shutting operations including cash investments.

According to Sophos, Criminals position DeFi savings scams as passive investment opportunities that are similar to money market accounts, often times to people who have no understanding of crypto.

Victims only need to connect their crypto wallet to a “brokerage account,” with the expectation that they will earn significant interest from their investment. In reality, victims are adding their crypto wallets to a fraudulent cryptocurrency trading pool, which the fraudsters then empty.

“Pig butchering rings are creating ready-made DeFi app kits, which other cybercriminals can purchase on the dark web. As a result, new pig butchering rings that are unaffiliated with Chinese organized crime groups are appearing in areas like Thailand, West Africa and even the U.S. As with other types of commercialized cybercrime, these kits lower the entry barriers for cybercriminals interested in pig butchering and vastly expand the victim pool. Last year, pig butchering was already a multi-billion-dollar fraud phenomenon; sadly, the problem is likely only to grow exponentially this year,” added Gallagher.

Sophos X-Ops has been tracking the evolution of pig butchering schemes for two years. The earliest iterations dubbed by Sophos as “CryptoRom” scams, involved connecting with potential victims on dating apps and then convincing them to download fraudulent crypto trading applications from third-party sources. For iOS users, these scams required victims to download an elaborate workaround that allowed scammers to bypass security on victims’ devices and gain access to their wallets.

In 2022, the scammers continued to refine their operations, this time finding ways to bypass app store review processes to sneak their fraudulent apps into the legitimate App Store and Google Play Store. This was also the year that a new scam pattern emerged: fake cryptocurrency trading pools (liquidity mining).

Last year Sophos X-Ops said it uncovered two vast pig butchering rings, one based out of Hong Kong and one based out of Cambodia. These rings leveraged legitimate crypto trading apps and created elaborate fake personas to lure victims and steal millions from them. Further investigation revealed that pig butchering operators were adding AI to their arsenal.

At the end of last year, the firm uncovered a vast liquidity mining operation involving three separate Chinese organized crime rings targeting nearly 100 victims. During the investigation into this operation, Sophos X-Ops first noticed the availability of pig butchering scam kits.

In the most recent pig butchering operations that Sophos X-Ops has investigated, the fraudsters have removed any previous technological impediments, as well as significantly lowered the amount of social engineering required to steal from victims.

In the DeFi savings schemes, victims now engage in fraudulent crypto trading through legitimate, well-known cryptocurrency apps and give (albeit unknowingly) the scammers direct access to their wallets. In addition, the scammers can conceal the wallet network that launders stolen crypto, making the scams harder for law enforcement to track.

“The DeFi savings scams are the culmination of two years of pig butcherers refining their operations. Gone are the days when the scammers had to convince victims to download some strange app or transfer the crypto themselves into a soon-to-be-stolen digital wallet,” note Gallagher.