The blockchain security firm Chainalysis released a mid-year update on crypto crime on August 29, 2024, revealing a significant rise in “pig butchering” scams within the cryptocurrency market. These scams involve perpetrators promising high returns to victims and then disappearing with their funds. The report noted that 43% of this year’s scam inflows were funneled into wallets created in 2024, many of which were linked to pig butchering schemes. Law enforcement has improved in dismantling long-term Ponzi schemes, leading crypto thieves to switch to shorter scams that last only a few weeks. Scammers are now using a mix of online and offline methods to carry out their scams, making them harder to catch.
Scammers are utilizing two main methods to deceive victims within these pig butchering scams. Firstly, they create new cryptocurrency wallets to hide their identities, and secondly, they buy existing social media profiles from platforms like Facebook and Tinder to appear trustworthy and gain victims’ trust. Victims of these scams include the elderly, individuals in transitional life phases, and those seeking friendship or romance online. The personal nature of these scams makes them particularly insidious and effective. The market for these illicit accounts has grown, with over $10 million in crypto flows attributed to this trade in the past two years. Eric Jardine, Chainalysis’s cybercrimes research lead, highlighted the adaptability and sophistication of scammers in carrying out these schemes.
The Chainalysis report also exposed Huione Guarantee as a key illicit marketplace, processing over $49 billion in cryptocurrency transactions since 2021. This platform is a hub for various illegal activities, including pig butchering scams, investment fraud, money laundering, and connecting buyers and sellers on messaging apps like Telegram. Despite these challenges, law enforcement agencies have achieved some victories against pig butchering operations. Recent actions include U.S. prosecutors in North Carolina seizing nearly $5 million worth of Tether linked to a pig butchering scam. The FBI emphasized the need for law enforcement to stay ahead of evolving criminal tactics to protect victims from such schemes in the digital age.
Recently, 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 had fallen victim to. Additionally, the U.S. Federal Trade Commission (FTC) issued a warning in June 2024 about the surge in pig butchering scams, especially those involving romance and cryptocurrency investments. These efforts aim to raise awareness about the risks associated with these scams and to protect individuals from falling victim to fraudulent schemes within the cryptocurrency market. Law enforcement continues to adapt and take proactive measures to combat these evolving criminal tactics and protect investors and victims from financial harm.
