Chainalysis: Pig Butchering Scams Persist in the Crypto Market
3 min read
Blockchain security firm Chainalysis has released a mid-year crypto crime update that reveals a sharp increase in “pig butchering” scams in the cryptocurrency market in 2024.
In these scams, scammers “fatten up” their victims by promising them high returns and then “slaughtering” them by disappearing with their funds.
Emerging Trend in Pig Butchering Scams
According to the report, 43% of this year’s fraud funds have flowed into wallets created in 2024, with many of these wallets linked to pig butchering schemes.
One of the largest wallets uncovered this year is linked to Myanmar-based KK Park, a known pig butchering scam artist. The wallet has already amassed over 100 million USD.
📣 Part 2 of our mid-year crypto crime update is here! We discuss the latest scam trends, review on-chain activity related to child sexual abuse material (CSAM), and examine Huione Guarantee, an online marketplace exposed for facilitating cybercrimes. https://t.co/rJBtYVk7Gb
— Chainalysis (@chainalysis) August 29, 2024
Still, the report highlights law enforcement successes that have improved the ability to break long-term Ponzi schemes.
As a result, crypto thieves are now moving to shorter scams that last just a few weeks. In fact, the average lifespan of crypto scams has dropped from 271 days in 2020 to 42 days in 2024. This development shows that scammers are adapting and becoming more sophisticated. They now use a mix of online and offline methods to conduct their scams, making them harder to catch.
The scammers use two methods to deceive their victims
First, they create new cryptocurrency wallets to conceal their identities. Second, they purchase existing social media profiles from platforms such as Facebook and Tinder, often from China-based service providers.
These profiles are designed to look trustworthy and have a history of activity and connections. The scammers use them to gain the trust of victims and convince them to invest in fake cryptocurrency projects. The market for these illegal accounts has grown. Over the past two years, more than 10 million USD in cryptocurrency flows have been attributed to this trade.
Eric Jardine, head of cybercrime research at Chainalysis, noted that victims of these scams include the elderly, people in transition, and people looking for friendship or romance online. The personal nature of these scams makes them particularly insidious and effective.
Illegal marketplaces fuelling the fire and recent law enforcement actions
The Chainalysis report also exposed Huione Guarantee as a major illicit marketplace that has processed over $49 billion worth of cryptocurrency transactions since 2021.
This platform is a hub for various illegal activities including pig butchering, investment fraud, money laundering, and connecting buyers and sellers through messaging apps like Telegram.
Amid these challenges, however, law enforcement has achieved some victories against pig butchering operations.
U.S. prosecutors in North Carolina recently seized nearly $5 million worth of Tether (USDT) linked to a pig butchering scam.
FBI Agent Robert DeWitt then stressed that law enforcement must always stay one step ahead of evolving criminal tactics : “As cyber fraud continues to adapt, the FBI and its partners must adapt as well.”
He added that the recent cryptocurrency seizure is a testament to the FBI’s commitment to protecting victims from such schemes in the digital age.
Similarly, on August 19, Shan Hanes, former CEO of Heartland Tri-State Bank in Kansas, was sentenced to over 24 years in prison for embezzling 47.1 million USD to fund a pig butchering scheme of which he was a victim.
RETAIL INVESTORS ARE FED UP WITH BANKERS STEALING FROM THE 99% 🚩
CEO of Heartland Tri-State Bank was just sentenced to 24 years in prison for embezzling $47.1 million.
As CEO, he wired over 1/3rd of their TOTAL DEPOSITS to a crypto scam.
He also faces trial on 29 state… pic.twitter.com/3FYJR9z65K
— The Butcher of Wall Street Marcel Kalinovic (@BossBlunts1) August 27, 2024
In a similar effort to raise awareness, the US Federal Trade Commission (FTC) issued an alert in June 2024 , pointing to the rise in pig butchering scams, particularly those related to romance and cryptocurrency investments.
