1 of 12

Blinded by Bias:

​

Understanding How Cognitive Distortions Fuel Crypto Scams

​

​

Tomomi Tanaka

​

February 21, 2024

(Google T&S UX Monthly Studio)

2 of 12

Source: Global Anti-Scam Org (GASO)

The pig butchering scam is a rapidly expanding form of cryptocurrency investment scam.

According to the FBI's Internet Crime Complaint Center report, crypto-investment scams accounted for the highest reported losses in 2022, with the total loss increasing from $907 million in 2021 to $2.57 billion in 2022.

What is pig butchering scam?

Who are the victims?

3 of 12

3

How did the victims meet scammers?

Pig Butchering Scam Report by RealCall�(996 respondents )

Vendors are selling scam accounts online

4 of 12

Who are the scammers?

s

Scam centers are based in Cambodia, Laos, Myanmar, and the Philippines.

People are trafficked from China, Hong Kong, Taiwan, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, Vietnam, South Asia (Bangladesh, India, Nepal, Pakistan), East Africa (Ethiopia, Kenya, Tanzania), Egypt, Turkey and Brazil.

UN Report

5 of 12

Start Harvesting

Playbook

  • Ask potential victims if they have investment experience
  • Tell potential victims that you have insider tips or family connections in the investment industry, and explain that massive returns are common
  • Guide potential victims to open accounts with
  • Binance, Coinbase, or
  • Phishing websites

Match with potential victims

Playbook

  • Tell users that they are new to the app and do not know much about it.
  • Invite potential victims to messaging apps (such as WhatsApp).

​

Develop relationship

Playbook

  • Stay in constant contact to build relationship.
  • Get to know free time and habits of potential victims
  • Selection criteria
    • Jobs
    • Cars
    • Houses
  • Warm up feelings
  • Tell sad stories to appeal to empathy

Scammers follow playbook

6 of 12

Typical conversation

with scammers

(I interacted with

over 200 pig butchering scams)

​

​

​

7 of 12

8 of 12

9 of 12

Some phishing websites

look like real investment sites

10 of 12

Fake Binance Website

11 of 12

How Cognitive Distortions

Fuel Cryptocurrency Scams

12 of 12

Key Cognitive Biases Contributing to Vulnerability in Scams

12

How it works

Cognitive bias

  • Emotional Attachment to the Anchor.
  • Trust in the Scammer

1

Anchoring Bias

2

Confirmation Bias

3

Optimism Bias

4

Scarcity Bias

5

Sunk Cost Fallacy

​

​

  • Initial Impressions Dictate Judgment
  • Ignoring Red Flags
  • Rationalizing Suspicious Behavior
  • ​
  • Underestimating Risk
  • Overconfidence in Judgment
  • Urgency Driven by Perceived Scarcity
  • Fear of Missing Out
  • Emotional Attachment to the Investment
  • Selective Attention
  • Resisting Contradictory Evidence
  • Engagement in Risky Behaviors
  • Delayed Response to Scam Realization
  • Rapid Decision-Making
  • Fear of Acknowledging Losses