Blockchain security firm Chainalysis has revealed a significant increase in “pig butchering” scams within the cryptocurrency market in 2024, according to a mid-year update on crypto crime released on August 29. These scams involve fraudsters “fattening up” their victims with promises of high returns, only to “slaughter” them by disappearing with their funds.
Rise of Pig Butchering Scams
The report indicates that 43% of scam-related inflows in 2024 have been funneled into wallets created this year, many of which are linked to pig butchering schemes. One of the largest wallets associated with these scams is tied to Myanmar’s KK Park, a notorious figure in the pig butchering world, with over $100 million already accumulated.
However, the report also highlights the success of law enforcement in dismantling long-term Ponzi schemes, which has forced scammers to adapt. These criminals now prefer shorter, more sophisticated scams that last only a few weeks. The average lifespan of crypto scams has decreased from 271 days in 2020 to just 42 days in 2024, showing how scammers are evolving their tactics to avoid detection.
Tactics Used by Scammers
Scammers have adopted two primary methods to deceive their victims. First, they create new cryptocurrency wallets to conceal their identities. Second, they purchase existing social media profiles from platforms like Facebook and Tinder, often sourced from China-based service providers. These profiles, appearing trustworthy with a history of activity, are used to gain victims’ trust and lure them into investing in fake cryptocurrency projects. The market for these illicit accounts has expanded, with over $10 million in crypto flows attributed to this trade over the past two years.
Eric Jardine, Chainalysis’s cybercrimes research lead, noted that the victims of these scams often include the elderly, individuals in transitional life phases, and those seeking friendship or romance online. The personal nature of these scams makes them particularly effective and harmful.
Illicit Marketplaces and Law Enforcement Actions
The report also exposes Huione Guarantee as a key illicit marketplace, having processed over $49 billion in cryptocurrency transactions since 2021. This platform is a hub for various illegal activities, including pig butchering scams, investment fraud, and money laundering, and facilitates connections between buyers and sellers on messaging apps like Telegram.
Despite the challenges, law enforcement agencies have made some strides against pig butchering operations. Recently, U.S. prosecutors in North Carolina seized nearly $5 million worth of Tether (USDT) linked to such a scam. FBI agent Robert DeWitt emphasized the importance of staying ahead of evolving criminal tactics, stating that the FBI and its partners must continuously adapt to protect victims in the digital age.
In a related case, Shan Hanes, former CEO of Heartland Tri-State Bank in Kansas, was sentenced to over 24 years in prison for embezzling $47.1 million to fund a pig butchering scheme he himself had fallen victim to.
To raise awareness, the U.S. Federal Trade Commission (FTC) issued a warning in June 2024 about the surge in pig butchering scams, particularly those involving romance and cryptocurrency investments.
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