Blockchain security firm Chainalysis recently unveiled a significant uptick in "pig butchering" scams within the cryptocurrency landscape in 2024. These scams entail perpetrators enticing victims with promises of high returns, only to disappear with their funds, leaving them financially gutted.
Evolving Trend on Pig Butchering Scams
According to Chainalysis's mid-year update on crypto crime, 43% of scam inflows this year have been channeled into wallets established in 2024, many of which are linked to pig butchering schemes. Notably, one of the largest scam wallets identified this year is tied to the notorious KK Park from Myanmar, a key player in pig butchery scams, amassing over $100 million in funds.
Despite the surge in pig butchering scams, the report commended law enforcement's progress in dismantling long-term Ponzi schemes, leading scammers to adopt shorter schemes lasting only a few weeks. The average lifespan of crypto scams has plummeted from 271 days in 2020 to just 42 days in 2024, indicating scammers' evolving and increasingly sophisticated tactics.
Scammers are employing two primary methods to dupe victims: creating new crypto wallets to conceal identities and purchasing established social media profiles from platforms like Facebook and Tinder, primarily from Chinese service providers. These profiles project legitimacy, complete with activity history and connections, to gain victims' trust for investing in sham crypto projects. The illicit market for these accounts has witnessed over $10 million in crypto flows over the past two years.
Eric Jardine, Chainalysis's cybercrimes research lead, highlighted that victims, including the elderly and individuals seeking companionship online, fall prey to these scams due to their personalized nature, making them highly effective.
Illicit Marketplaces Fueling the Fire And Recent Law Enforcement Actions
Chainalysis's report pinpointed Huione Guarantee as a primary illicit marketplace, facilitating over $49 billion in crypto transactions since 2021, fueling activities like pig butchering scams, money laundering, and investment fraud, along with connecting buyers and sellers on platforms like telegram.
Despite these challenges, law enforcement agencies have made headway against pig butchering operations, exemplified by the recent seizure of nearly $5 million worth of Tether (USDT) linked to a pig butchering scam by U.S. prosecutors in North Carolina. FBI agent Robert DeWitt emphasized the necessity for law enforcement to stay ahead of evolving criminal tactics, underlining the FBI's commitment to safeguarding victims from digital age schemes.
Additionally, Shan Hanes, former CEO of Heartland Tri-State Bank, was handed a 24-year prison sentence for embezzling $47.1 million to propagate a pig butchering scheme he had fallen victim to. The U.S. Federal Trade Commission issued a warning in June 2024 to caution consumers about the escalating threat of pig butchering scams, especially in the realms of romance and cryptocurrency investments.
