Crypto "Pig Butchering" Scheme: Lawsuit Targets Qbit

Case Overview: A class action lawsuit accuses Qbit and QbitPay of facilitating a "pig butchering" crypto scam, where victims were duped into investing in fake opportunities and then had their funds stolen.

Consumers Affected: Individuals in the U.S. who were scammed into transferring cryptocurrency into wallets controlled by Qbit and QbitPay.

Court: U.S. District Court for the Northern District of California, San Jose Division

A new lawsuit accuses cryptocurrency firms Qbit and QbitPay of orchestrating a widespread fraud scheme known as "pig butchering," in which scammers befriend victims online, gain their trust, and convince them to invest in fake crypto opportunities before stealing their funds. 

The lawsuit, filed by Alabama resident Michael Mashkevich, claims that the companies, led by CEO Yujun Wu, facilitated money laundering and knowingly profited from stolen cryptocurrency.

Crypto Investors Claim "Pig Butchering" Scheme

Mashkevich alleges that scammers contacted him through WhatsApp in March 2024, pretending to offer a lucrative investment opportunity. They followed a scripted process, allowing him to withdraw small amounts of funds early on to build trust. But as he invested more, they locked him out of his accounts and vanished, taking his money with them.

With the help of cryptocurrency investigative firm Inca Digital, Mashkevich traced a large portion of the stolen funds to an OKX cryptocurrency wallet allegedly owned by Qbit. The lawsuit claims that despite Qbit’s insistence that the wallet was for legitimate business transactions, forensic analysis suggests it was used to launder stolen money.

How the Alleged Scam Worked: Luring and Stealing

The “pig butchering” scam—named after the practice of fattening up pigs before slaughter—relies on long-term psychological manipulation, the lawsuit explains. Scammers initiate contact through social media, dating apps, or messaging platforms, often with a simple “hello” text. 

Once they establish trust, they introduce victims to what appears to be a legitimate crypto trading platform. Victims see fake profits and are encouraged to invest more. But when they attempt to withdraw funds, they find their accounts frozen.

The lawsuit details how the stolen cryptocurrency was funneled through multiple wallets in a sophisticated money-laundering operation. Initial deposits were moved through intermediary accounts before being consolidated in larger exchange wallets, where the crypto was likely converted into traditional currency, making recovery nearly impossible.

Crypto Fraud Under Legal Scrutiny

Qbit’s alleged scheme is just one of many cryptocurrency-related fraud cases surfacing in recent years. In 2023 alone, pig butchering scams cost U.S. victims over $5.3 billion, with actual numbers likely much higher due to underreporting, the lawsuit states. 

The lawsuit against Qbit could set a precedent for holding cryptocurrency firms accountable for facilitating fraud. The Alabama court has already issued orders freezing the implicated Qbit wallets, but the company is fighting back, arguing the court lacks jurisdiction. 

Other major financial fraud lawsuits have made headlines, too. Charles Schwab is currently facing a class action lawsuit over allegations it misused customer funds to finance its TD Ameritrade acquisition. 

Robinhood was hit with a lawsuit in December for allegedly offering low returns on customer deposits while profiting from its cash sweep program. Meanwhile, crypto giant Coinbase is defending itself against allegations of illegally selling unregistered securities.

In his lawsuit against the cryptocurrency platforms and scammers, Mashkevich wants to represent anyone in the US who was scammed into transferring cryptocurrency into one or more of the cryptocurrency wallets controlled by the alleged scammers. 

Case Details

• Lawsuit: Mashkevich v. UAB Qbit Financial Service; Bytechip LLC D/B/A Qbit And QbitPay, et al.
• Case Number: 5:25-cv-02565
• Court: U.S. District Court Northern District of California, San Jose Division 

Plaintiffs' Attorneys

• Vijay J. Rajagopal (Kurichety Law PC)
• Michael Kozlowski (Esbrook P.C.)

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